Sylvamo posts $199M Q3 loss after Europe impairment
A $342 million Europe-business impairment and lower quarterly cash generation accompany the proposed divestiture.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
Sylvamo Corp (SLVM) reported third-quarter net sales from continuing operations of $645 million, versus $662 million a year earlier, and income from continuing operations of $85 million, versus $71 million. It recorded a $199 million net loss, compared with $57 million net income, including a $284 million loss from discontinued operations.
Adjusted EBITDA was $128 million versus $158 million; free cash flow was $16 million versus $64 million; and cash provided by operating activities from continuing operations was $70 million versus $114 million. Sylvamo recorded a $342 million impairment charge for its Europe business and a $67 million gain, including an expected cumulative foreign-currency translation gain and other accumulated other comprehensive loss to be recognized upon sale.
Sylvamo committed to sell its Europe segment and announced exclusive negotiations following a put option agreement with Midas Atlantic Partners, in partnership with The Najafi Companies. The offer transfers the business with an agreed level of working capital and cash in exchange for the right to receive 20% of future distributions; it binds the buyer, not Sylvamo. Sylvamo must complete required consultations before deciding whether to exercise the option, and any sale remains subject to approvals and closing conditions.
1 point · 0 major1 major · 4 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointContinuing-operations income: $85 million in Q3 2026, versus $71 million.
Negative
- Major pointEurope-business impairment charge: $342 million in Q3 2026. 26% of market cap
- Moderate pointAdjusted EBITDA: $128 million in Q3 2026, versus $158 million.
- Moderate pointFree cash flow: $16 million in Q3 2026, versus $64 million.
- Moderate pointContinuing-operations operating cash flow: $70 million in Q3 2026, versus $114 million.
Filing Explained
Sylvamo says the Europe divestiture is expected by
Key Figures
Net sales from continuing operations: $645 million; $662 million
Income from continuing operations: $85 million; $71 million
Diluted earnings per share from continuing operations: $2.13; $1.76
+5 more
8 metrics
Net sales from continuing operations
$645 million; $662 million
Three months ended September 30, 2026 and 2025, respectively
Income from continuing operations
$85 million; $71 million
Three months ended September 30, 2026 and 2025, respectively
Diluted earnings per share from continuing operations
$2.13; $1.76
Three months ended September 30, 2026 and 2025, respectively
Adjusted EBITDA
$128 million; $158 million
Three months ended September 30, 2026 and 2025, respectively; non-GAAP measure
Free cash flow
$16 million; $64 million
Three months ended September 30, 2026 and 2025, respectively; non-GAAP measure
Cash provided by operating activities from continuing operations
$70 million; $114 million
Three months ended September 30, 2026 and 2025, respectively
Europe-business impairment charge
$342 million
Recorded in the third quarter of 2026
Future distributions under proposed Europe sale
20%
Offer provides the right to receive this share of future distributions
Key Terms
Discontinued operations, Adjusted EBITDA, Free cash flow, Put option agreement, +1 more
5 terms
Discontinued operations financial
"presented as “Discontinued operations, net of taxes”"
Discontinued operations are parts of a company that it has decided to sell or shut down, and no longer plans to run in the future. This matters to investors because it helps them understand which parts of the business are ongoing and which are being phased out, providing a clearer picture of the company’s current performance and future prospects. Think of it like a store closing a department—it no longer contributes to sales or profits.
Adjusted EBITDA financial
"Adjusted EBITDA (non-GAAP)"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Free cash flow financial
"Free cash flow, a non-GAAP financial measure"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
Put option agreement technical
"entered into a put option agreement"
A put option agreement is a contract that gives its holder the right to sell a specified number of shares at an agreed price within a set period. Think of it like an insurance policy that guarantees you can offload stock at a known price if the market falls; for investors it provides downside protection but can also create obligations for the counterparty (often the company) to buy back shares, which can affect cash flows and ownership stakes.
Working capital financial
"with an agreed level of working capital and cash"
Working capital is the money a business has available to cover its daily expenses, like paying bills and buying supplies. It’s like the cash in your wallet that helps you handle everyday costs; having enough ensures the business can operate smoothly without running into money shortages.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How did SLVM perform in Q3 2026?
SLVM reported third-quarter net sales from continuing operations of $645 million, compared with $662 million in 2025, and income from continuing operations of $85 million, versus $71 million. Adjusted EBITDA was $128 million and free cash flow was $16 million.
What are the terms of SLVM's proposed Europe sale?
The offer would transfer the Europe business to Midas Atlantic Partners, in partnership with The Najafi Companies, with an agreed level of working capital and cash in exchange for the right to receive 20% of future distributions. The offer binds the buyer, but not Sylvamo.
Could SLVM's Europe sale fail to close?
Sylvamo stated that it may not complete the proposed sale. It must complete required consultation processes with works councils and employee representatives before deciding whether to exercise the put option and enter a share purchase agreement; the transaction is also subject to approvals and other closing conditions.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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 September 30, 2026
| 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
________________
(Exact Name of Registrant as Specified in its Charter)
________________
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||
(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 | ||||||
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.
| ☒ | 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 October 30, 2026 was 39,769,756 .
INDEX
| PAGE NO. | ||||||||
PART I. FINANCIAL INFORMATION | ||||||||
Item 1. | Financial Statements | |||||||
Condensed Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2026 and 2025 | 1 | |||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and Nine Months Ended September 30, 2026 and 2025 | 2 | |||||||
Condensed Consolidated Balance Sheets - September 30, 2026 and December 31, 2025 | 3 | |||||||
Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2026 and 2025 | 4 | |||||||
Notes to Condensed Consolidated Financial Statements | 5 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 32 | ||||||
Item 4. | Controls and Procedures | 32 | ||||||
PART II. OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 34 | ||||||
Item 1A. | Risk Factors | 34 | ||||||
| Item 2. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers | 35 | ||||||
Item 6. | Exhibits | 36 | ||||||
Signatures | 37 | |||||||
ITEM 1. FINANCIAL STATEMENTS
SYLVAMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
NET SALES | $ | $ | $ | $ | ||||||||||||||||||||||
COSTS AND EXPENSES | ||||||||||||||||||||||||||
Cost of products sold (exclusive of depreciation, amortization and cost of timber harvested shown separately below) | ||||||||||||||||||||||||||
Selling and administrative expenses | ||||||||||||||||||||||||||
Depreciation, amortization and cost of timber harvested | ||||||||||||||||||||||||||
Taxes other than payroll and income taxes | ||||||||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | ||||||||||||||||||||||||||
Income tax provision (benefit) | ( | |||||||||||||||||||||||||
| NET INCOME FROM CONTINUING OPERATIONS | ||||||||||||||||||||||||||
| Discontinued operations, net of taxes | ( | ( | ( | ( | ||||||||||||||||||||||
| NET INCOME (LOSS) | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
| BASIC EARNINGS (LOSS) PER SHARE | ||||||||||||||||||||||||||
| Earnings from continuing operations | $ | $ | $ | $ | ||||||||||||||||||||||
| Discontinued operations, net of taxes | ( | ( | ( | ( | ||||||||||||||||||||||
| Net earnings (loss) | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
| DILUTED EARNINGS (LOSS) PER SHARE | ||||||||||||||||||||||||||
| Earnings from continuing operations | $ | $ | $ | $ | ||||||||||||||||||||||
| Discontinued operations, net of taxes | ( | ( | ( | ( | ||||||||||||||||||||||
| Net earnings (loss) | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
SYLVAMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In millions)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
NET INCOME (LOSS) | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | ||||||||||||||||||||||||||
Defined benefit pension and postretirement adjustments: | ||||||||||||||||||||||||||
| Amortization of pension and postretirement net loss | ||||||||||||||||||||||||||
| Pension and postretirement liability adjustments | ( | |||||||||||||||||||||||||
Change in cumulative foreign currency translation adjustment | ( | |||||||||||||||||||||||||
Net gains/losses on cash flow hedging derivatives: | ||||||||||||||||||||||||||
Net gains (losses) arising during the period (less tax of $ | ||||||||||||||||||||||||||
Reclassification adjustment for (gains) losses included in net earnings (less tax of $ | ( | ( | ( | ( | ||||||||||||||||||||||
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | ( | |||||||||||||||||||||||||
COMPREHENSIVE INCOME (LOSS) | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
SYLVAMO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
| September 30, 2026 | December 31, 2025 | |||||||||||||
ASSETS | ||||||||||||||
Current Assets | ||||||||||||||
| Cash and temporary investments | $ | $ | ||||||||||||
| Accounts and notes receivable, net | ||||||||||||||
| Contract assets | ||||||||||||||
| Inventories | ||||||||||||||
| Assets held for sale | ||||||||||||||
| Other current assets | ||||||||||||||
| Total Current Assets | ||||||||||||||
| Plants, Properties and Equipment, net | ||||||||||||||
| Forestlands | ||||||||||||||
| Goodwill | ||||||||||||||
| Right of Use Assets | ||||||||||||||
| Long-Term Assets Held for Sale | ||||||||||||||
| Deferred Charges and Other Assets | ||||||||||||||
| TOTAL ASSETS | $ | $ | ||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
Current Liabilities | ||||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Notes payable and current maturities of long-term debt | ||||||||||||||
| Accrued payroll and benefits | ||||||||||||||
| Liabilities held for sale | ||||||||||||||
| Other current liabilities | ||||||||||||||
| Total Current Liabilities | ||||||||||||||
| Long-Term Debt | ||||||||||||||
| Deferred Income Taxes | ||||||||||||||
| Long-Term Liabilities Held for Sale | ||||||||||||||
| Other Liabilities | ||||||||||||||
| Commitments and Contingent Liabilities (Note 12) | ||||||||||||||
| Equity | ||||||||||||||
Common stock $ | ||||||||||||||
| Paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
Less: Common stock held in treasury, at cost, | ( | ( | ||||||||||||
| Total Equity | ||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
SYLVAMO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
| Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
OPERATING ACTIVITIES | ||||||||||||||
Net income from continuing operations | $ | $ | ||||||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||||
Depreciation, amortization, and cost of timber harvested | ||||||||||||||
Deferred income tax provision (benefit), net | ( | ( | ||||||||||||
Stock-based compensation | ||||||||||||||
| Foreign exchange gain on intercompany note | ( | |||||||||||||
Changes in operating assets, liabilities and other: | ||||||||||||||
Accounts and notes receivable | ||||||||||||||
Inventories | ( | ( | ||||||||||||
Accounts payable and accrued liabilities | ( | ( | ||||||||||||
Other | ( | ( | ||||||||||||
CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS | ||||||||||||||
| CASH USED FOR OPERATING ACTIVITIES FROM DISCONTINUED OPERATIONS, NET | ( | ( | ||||||||||||
| CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||||||
INVESTMENT ACTIVITIES | ||||||||||||||
Invested in capital projects | ( | ( | ||||||||||||
Other | ||||||||||||||
CASH USED FOR INVESTMENT ACTIVITIES FROM CONTINUING OPERATIONS | ( | ( | ||||||||||||
| CASH USED FOR INVESTMENT ACTIVITIES FROM DISCONTINUED OPERATIONS, NET | ( | ( | ||||||||||||
| CASH USED FOR INVESTMENT ACTIVITIES | ( | ( | ||||||||||||
FINANCING ACTIVITIES | ||||||||||||||
| Dividends paid | ( | ( | ||||||||||||
| Issuance of debt | ||||||||||||||
Reduction of debt | ( | ( | ||||||||||||
| Repurchases of common stock | ( | |||||||||||||
| Other | ( | ( | ||||||||||||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES FROM CONTINUING OPERATIONS | ( | |||||||||||||
| CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES FROM DISCONTINUED OPERATIONS, NET | ( | |||||||||||||
| CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | ( | |||||||||||||
Effect of Exchange Rate Changes on Cash | ||||||||||||||
| Change in Cash Included in Assets Held for Sale | ( | ( | ||||||||||||
Change in Cash and Temporary Investments | ( | |||||||||||||
Cash and Temporary Investments | ||||||||||||||
Beginning of the period | ||||||||||||||
End of the period | $ | $ | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
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 nine 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, 2025 (the "Annual Report" or “2025 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.
Divestiture of Europe Business Segment
During the third quarter of 2026, management committed to a plan to sell the Company’s Europe business segment. As a result, all current and historical operating results of the Europe business segment are presented as “Discontinued operations, net of taxes” in the condensed consolidated statement of operations and the notes to the condensed consolidated financial statements. All historical assets and liabilities of the Europe business segment are classified as current and long-term assets and liabilities held for sale in the accompanying condensed consolidated balance sheet. We recorded a pre-tax charge of $342 million ($342 million after taxes) for the impairment of the Europe business segment and a pre-tax gain of $67 million ($67 million after taxes) which includes an expected cumulative foreign currency translation gain and other accumulated other comprehensive loss related to our Europe business segment, which will be recognized upon the sale of the business. See Note 7 Divestiture and Impairment of Business for further details.
Our operations in Europe include two integrated paper mills in the region, one in Saillat, France and one in Nymölla, Sweden. Operations related to these mills represented approximately 23 % of our net sales for the nine months ended September 30, 2026 and 17 % of our long-lived assets as of September 30, 2026.
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 2025 Form 10-K and updated in our June 30, 2026 10-Q. There have been no material changes to the significant accounting policies for the nine months ended September 30, 2026, with the exception of the below policy that was added.
Discontinued Operations
A discontinued operation may include a component or a group of components of the Company's operations. A disposal of a component or a group of components is reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on the Company's operations and financial results when the following occurs: (1) a component (or group of components) meets the criteria to be classified as held for sale; (2) the component or group of components is disposed of by sale; or (3) the component or group of components is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spin-off). For any component classified as held for sale or disposed of by sale or other than by sale, qualifying for presentation as a discontinued operation, the Company reports the results of operations of the discontinued operations (including any gain or loss recognized on the disposal or loss recognized on classification as held for sale of a discontinued operation), less applicable income taxes (benefit), as a separate component in the consolidated statements of operations for current and all prior periods presented. The Company also reports assets and liabilities associated with discontinued operations as separate line items on the consolidated balance sheets for prior periods. See Note 7 Divestiture and Impairment of Business for further details.
5
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.
NOTE 3 REVENUE RECOGNITION
External Net Sales by Product
External net sales by major products were as follows by business segment:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
In millions | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
Latin America | ||||||||||||||||||||||||||
Uncoated Papers | $ | $ | $ | $ | ||||||||||||||||||||||
Market Pulp | ||||||||||||||||||||||||||
Latin America | ||||||||||||||||||||||||||
North America | ||||||||||||||||||||||||||
Uncoated Papers | ||||||||||||||||||||||||||
Market Pulp | ||||||||||||||||||||||||||
North America | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
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 $2 million and $2 million are included in “Other current liabilities” as of September 30, 2026 and December 31, 2025, 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.
6
NOTE 4 EQUITY
A summary of changes in equity for the three and nine months ended September 30, 2026 and 2025 is provided below:
| Three Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
In millions | Shares | Common Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Common Stock Held In Treasury, At Cost | Total Equity | |||||||||||||||||||||||||||||||||||||
Balance, June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
Stock-based employee compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Share repurchases | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
In millions | Shares | Common Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Common Stock Held In Treasury, At Cost | Total Equity | |||||||||||||||||||||||||||||||||||||
Balance, December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
Stock-based employee compensation | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Share repurchases | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
In millions | Shares | Common Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Common Stock Held In Treasury, At Cost | Total Equity | |||||||||||||||||||||||||||||||||||||
Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
Stock-based employee compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Share repurchases | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
In millions | Shares | Common Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Common Stock Held In Treasury, At Cost | Total Equity | |||||||||||||||||||||||||||||||||||||
Balance, December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
Share-based employee compensation | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Share repurchases | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
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NOTE 5 OTHER COMPREHENSIVE INCOME (LOSS)
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 September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
In millions | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
Defined Benefit Pension and Postretirement Adjustments | ||||||||||||||||||||||||||
Balance at beginning of period | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | |||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ||||||||||||||||||||||||||
Balance at end of period | ( | ( | ( | ( | ||||||||||||||||||||||
Change in Cumulative Foreign Currency Translation Adjustments | ||||||||||||||||||||||||||
Balance at beginning of period | ( | ( | ( | ( | ||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | |||||||||||||||||||||||||
Balance at end of period | ( | ( | ( | ( | ||||||||||||||||||||||
Net Gains and Losses on Cash Flow Hedging Derivatives | ||||||||||||||||||||||||||
Balance at beginning of period | ||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive income (loss) | ( | ( | ( | ( | ||||||||||||||||||||||
Balance at end of period | ||||||||||||||||||||||||||
Total Accumulated Other Comprehensive Income (Loss) at End of Period | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
NOTE 6 EARNINGS PER SHARE
Basic earnings per share from continuing operations is computed by dividing net income from continuing operations by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share from continuing operations is computed by dividing net income from continuing operations 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. Basic and dilutive earnings per share from discontinued operations are computed under the same approach utilizing the same weighted-average number of shares of common stock outstanding during the period and dilutive shares.
There are no adjustments required to be made to net income from continuing operations for purposes of computing basic and diluted earnings from continuing operations per share.
8
Basic and diluted earnings from continuing operations per share are calculated as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
In millions, except per share amounts | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
Net income from continuing operations | $ | $ | $ | $ | ||||||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||
| Effect of dilutive securities | ||||||||||||||||||||||||||
Weighted average common shares outstanding - assuming dilution | ||||||||||||||||||||||||||
Earnings per share from continuing operations - basic | $ | $ | $ | $ | ||||||||||||||||||||||
Earnings per share from continuing operations - diluted | $ | $ | $ | $ | ||||||||||||||||||||||
Anti-dilutive shares (a) | ||||||||||||||||||||||||||
NOTE 7 DIVESTITURE AND IMPAIRMENT OF BUSINESS
Europe Business Segment
During the third quarter of 2026, management committed to a plan to sell the Company’s Europe business segment. The divestiture of the business under this plan is expected to occur by the end of the first quarter of 2027. As a result, all current and historical operating results of the Europe business segment are presented as “Discontinued operations, net of taxes” in the condensed consolidated statement of operations and the notes to the condensed consolidated financial statements. All historical assets and liabilities of the Europe business segment are classified as current and long-term assets and liabilities held for sale in the accompanying condensed consolidated balance sheet.
The following summarizes the major classes of line items comprising Income (Loss) Before Income Taxes reconciled to “Discontinued Operations, net of taxes”, related to the Europe business segment for all periods presented in the condensed consolidated of operations.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
In millions | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| NET SALES | $ | $ | $ | $ | ||||||||||||||||||||||
| COSTS AND EXPENSES | ||||||||||||||||||||||||||
| Cost of products sold (exclusive of depreciation, amortization and cost of timber harvested shown separately below) | ||||||||||||||||||||||||||
| Selling and administrative expenses | ||||||||||||||||||||||||||
| Depreciation, amortization and cost of timber harvested | ||||||||||||||||||||||||||
| Taxes other than payroll and income taxes | ||||||||||||||||||||||||||
| Impairment of business | ||||||||||||||||||||||||||
| Interest expense, net | ||||||||||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | ( | ( | ( | ( | ||||||||||||||||||||||
| Income tax provision (benefit) | ( | ( | ( | ( | ||||||||||||||||||||||
| DISCONTINUED OPERATIONS, NET OF TAXES | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
The following summarizes the major classes of assets and liabilities of the Europe business segment operations reconciled to the accompanying condensed consolidated balance sheets, with all amounts as of September 30, 2026 being presented as current assets or liabilities held for sale.
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In millions | September 30, 2026 | December 31, 2025 | ||||||||||||
| Cash and temporary investments | $ | $ | ||||||||||||
| Accounts and notes receivable | ||||||||||||||
| Inventories | ||||||||||||||
| Other current assets | ||||||||||||||
| Current Assets Held for Sale | ||||||||||||||
| Plants, Properties and Equipment, net | ||||||||||||||
| Right of Use Assets | ||||||||||||||
| Deferred Charges and Other Assets | ||||||||||||||
| Long-Term Assets Held for Sale | ||||||||||||||
| Notes payable and current maturities of long-term debt | ||||||||||||||
| Accounts payable | ||||||||||||||
| Accrued payroll and benefits | ||||||||||||||
| Valuation allowance to adjust net assets to estimated fair value, less costs of disposal | ||||||||||||||
| Other current liabilities | ||||||||||||||
| Current Liabilities Held for Sale | ||||||||||||||
| Long-Term Debt | ||||||||||||||
| Other Liabilities | ||||||||||||||
| Long-Term Liabilities Held for Sale | $ | $ | ||||||||||||
The following summarizes the total cash used for operating activities from discontinued operations, net and total cash used for investing activities from discontinued operations, net and included in the consolidated statement of cash flows:
| Nine Months Ended September 30, | ||||||||||||||
In millions | 2026 | 2025 | ||||||||||||
| Cash Used for Operating Activities | $ | ( | $ | ( | ||||||||||
Cash Used for Investment Activities (a) | $ | ( | $ | ( | ||||||||||
(a) Includes cash invested in capital projects of $12 million and $26 million for the nine months ended September 30, 2026 and 2025, respectively.
During the third quarter of 2026, as a result of management’s commitment to a plan to sell the Company’s Europe business segment, a determination was made that the carrying value of the Europe business segment exceeded its estimated fair value. The fair value of the Europe business segment was estimated based on a probability-weighted average approach of potential cash flows from various alternatives with respect to the business. This estimated fair value was calculated using information available as of the impairment evaluation date of September 30, 2026 and could change materially in future periods. As a result, in the third quarter of 2026, we recorded a pre-tax charge of $342 million ($342 million after taxes) for the impairment of the Europe business segment and a pre-tax gain of $67 million ($67 million after taxes) which includes an expected cumulative foreign currency translation gain and other accumulated other comprehensive loss related to our Europe business segment, which will be recognized upon the sale of the business. These amounts are included in “Impairment of business” within the summarized income statement for our Europe business segment included in this footnote and is included in “Discontinued operations, net of taxes” in the condensed consolidated statement of operations and are reflected in the valuation allowance to adjust net assets to estimated fair value, less costs to dispose in current liabilities held for sale.
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NOTE 8 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 $79 million and $62 million at September 30, 2026 and December 31, 2025, respectively.
Accounts and Notes Receivable, Net
Accounts and notes receivable, net, by classification were:
In millions | September 30, 2026 | December 31, 2025 | ||||||||||||
Accounts and notes receivable: | ||||||||||||||
Trade | $ | $ | ||||||||||||
Notes and other | ||||||||||||||
Total | $ | $ | ||||||||||||
The allowance for expected credit losses was $17 million and $14 million at September 30, 2026 and December 31, 2025, 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 | September 30, 2026 | December 31, 2025 | ||||||||||||
Raw materials | $ | $ | ||||||||||||
Finished paper and pulp products | ||||||||||||||
Operating supplies | ||||||||||||||
Other | ||||||||||||||
Total | $ | $ | ||||||||||||
Plants, Properties and Equipment, Net
Accumulated depreciation was $3.2 billion and $3.1 billion at September 30, 2026 and December 31, 2025, respectively. Depreciation expense was $27 million and $28 million for the three months and $79 million and $79 million for the nine months ended September 30, 2026 and 2025, respectively.
Additions to plants, property and equipment included within “Accounts payable” were $12 million and $15 million at September 30, 2026 and December 31, 2025, respectively.
Forestlands
Depletion expense, recorded within “Depreciation, amortization and cost of timber harvested”, was $9 million and $11 million for the three months and $25 million and $29 million for the nine months ended September 30, 2026 and 2025, respectively.
Accounts Payable
The Company maintains supplier finance agreements with third-party financial institutions. These agreements allow the Company’s participating suppliers to sell their receivables to such third-party financial institutions to receive payment earlier
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than the negotiated commercial terms between the supplier and the Company. Such sales are at the sole discretion of the supplier, and on terms and conditions that are negotiated between the supplier and the respective financial institution. The terms and conditions of the supplier invoice, including payment terms and amounts due, are not impacted by a supplier’s participation in the program. Pursuant to the supplier finance agreements, the Company has agreed to pay financial institutions on the original due date of the applicable invoice. There are no guarantees associated with these programs. The Company's outstanding obligations to financial institutions related to supplier financing programs were $11 million and $3 million as of September 30, 2026 and December 31, 2025, respectively.
Interest Expense, Net
Interest payments of $41 million and $37 million were made during the nine months ended September 30, 2026 and 2025, respectively.
Amounts related to interest were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
In millions | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
Interest expense (a) | $ | $ | $ | $ | ||||||||||||||||||||||
Interest income | ( | ( | ( | ( | ||||||||||||||||||||||
Capitalized interest costs | ( | ( | ( | ( | ||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
Asset Retirement Obligations
As of September 30, 2026 and December 31, 2025, we have recorded liabilities of $29 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 9 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 remaining lease terms of up to 15 years. Total lease cost was $13 million and $13 million for the three months and $40 million and $39 million for the nine months ended September 30, 2026 and 2025, respectively.
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Supplemental Balance Sheet Information Related to Leases
In millions | Classification | September 30, 2026 | December 31, 2025 | ||||||||||||||
Assets | |||||||||||||||||
Operating lease assets | Right of use assets | $ | $ | ||||||||||||||
Finance lease assets | |||||||||||||||||
Total leased assets | $ | $ | |||||||||||||||
Liabilities | |||||||||||||||||
Current | |||||||||||||||||
Operating | $ | $ | |||||||||||||||
Finance | |||||||||||||||||
Noncurrent | |||||||||||||||||
Operating | |||||||||||||||||
Finance | |||||||||||||||||
Total lease liabilities | $ | $ | |||||||||||||||
(a)Finance leases are recorded net of accumulated amortization of $14 million and $13 million as of September 30, 2026 and December 31, 2025, respectively.
NOTE 10 GOODWILL
The following table presents changes in the goodwill balance as allocated to each business segment for the nine months ended September 30, 2026:
In millions | Latin America | North America | Total | ||||||||||||||||||||
| Balance as of December 31, 2025 | |||||||||||||||||||||||
Goodwill | $ | $ | $ | ||||||||||||||||||||
Accumulated impairment losses | |||||||||||||||||||||||
Currency translation and other | |||||||||||||||||||||||
| Balance as of September 30, 2026 | |||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||
Accumulated impairment losses | |||||||||||||||||||||||
Total | $ | $ | $ | ||||||||||||||||||||
NOTE 11 INCOME TAXES
An income tax (benefit) provision of $(14 ) million and $2 million was recorded for the three and nine months ended September 30, 2026, respectively, and the reported effective income tax rate was (20 )% and 2 %, respectively. The effective income tax rate for these periods was primarily driven by a tax benefit related to our investment in our European subsidiaries of $36 15 million valuation allowance on certain foreign deferred tax assets due to an internal merger. An income tax provision of $34 million and $48 million was recorded for the three and nine months ended September 30, 2025, respectively, and the reported effective income tax rate was 32 % and 23 %, respectively.
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 $113 million in tax, and $327 million in interest, penalties and fees as of September 30, 2026 (adjusted for variation in currency exchange rates). 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
13
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 Brazilian tax authorities have appealed the favorable ruling. One third of the disputed amounts was under challenge at the Brazilian administrative court level and was not part of the ruling. In November 2025, the administrative court upheld the assessments for the remaining one third of the disputed amounts. In January 2026, Sylvamo Brasil’s challenge of the administrative ruling was filed in the Brazilian federal court system. 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 12 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 September 30, 2026.
Legacy Basins Environmental Matter (Brazil)
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 was 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 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 was thereafter suspended, as agreed by CETESB, and the Company continued to conduct environmental testing and analysis and engage with CETESB in review of the results and establishing next steps.
On June 15, 2026, an agreement between the Company and CETESB was approved by the State Court of São Paulo, concluding a proceeding initiated by the Company to clarify or close various requirements imposed on the Company by CETESB with respect to the basins’ site (the “CETESB Agreement”). The CETESB agreement is a favorable result for the Company, because it establishes that the type of remediation needed at the site will depend upon the site’s future use to be proposed by the Company. Pursuant to the CETESB Agreement, by March 2027 (subject to extension), the Company must provide CETESB with a plan for potential future use of the site and proposed monitoring, management and, potentially, remediation, appropriate to such use.
As of September 30, 2026, the Company has recorded an immaterial liability, mainly for fees that it expects to incur for third-party assistance with preparing the Company’s plan contemplated by the CETESB Agreement. The Company is unable to estimate its ultimate potential liability, which may be material and will depend primarily upon the Company’s proposed use for the site in such plan, the monitoring and remediation determined to be appropriate to such use, the timeframe for implementing
14
the plan, and CETESB’s approval of the plan, including any requirements that CETESB may impose as a condition to its approval. CETESB’s approval will depend upon CETESB’s assessment of the plan, including supporting third-party consultant information to be developed and included in the plan.
Suzano Pulp Supply VAT Matter (Brazil)
Suzano S.A. (“Suzano”) and the Company are in arbitration over a dispute related to Suzano’s decision to invoice Brazilian VAT, starting January 2026, on pulp sold to the Company under a supply agreement entered into in 2006 (“Supply Agreement”), pursuant to which Suzano supplies pulp to the Company’s Três Lagoas, Brazil mill. VAT was not invoiced on sales under the agreement prior to 2026, and the parties disagree on whether invoicing VAT is allowed under the Supply Agreement.
On October 14, 2026, the tribunal overseeing the arbitration granted the Company interim relief preventing Suzano from invoicing VAT under the Supply Agreement until it issues a further decision on such relief, overriding a previous court decision that would have allowed Suzano to invoice VAT while the arbitration is ongoing. If Suzano were to prevail in the arbitration, the VAT potentially invoiced could total $15 to $20 million annually, although Suzano’s ability to invoice VAT would expire in 2032 due to a change in Brazil’s VAT law.
The dispute process and related arbitration in Brazil is in early stages, and the Company intends to vigorously defend its position that the VAT should not be invoiced. As of September 30, 2026, the Company has not recorded any liability for this matter.
Taxes Other Than Payroll Taxes
See Note 11 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 Sylvamo Brasil for approximately $63 million (adjusted for variation in currency exchange rates) regarding unpaid VAT arising from intercompany transactions. This assessment includes $20 million in tax and $43 million in interest and penalties. The Company is challenging this assessment. As of September 30, 2026, no reserve has been recorded by the Company because the risk of loss is not probable.
Since 2012, the Company has been involved in a dispute with Brazilian tax authorities concerning VAT credits taken in 2009 and 2010 related to imported materials used in the Company’s operations. The potential liability of $27 million includes $6 million of tax and $21 million of interest, legal fees and penalties (adjusted for variation in currency exchange rates). Also, since 2016, the Company has been involved in a similar, separate dispute concerning VAT credits taken in 2011 through 2013. The potential liability for this matter is $19 million which includes $4 million of tax and $15 million of interest, legal fees and penalties (adjusted for variation in currency exchange rates). Although initially not material, the potential liability for these disputes has become material over time due to variations in currency exchange rates and the accumulation of interest. The Company is vigorously defending both cases in Brazilian courts. If the Company fails to prevail in either case, it could set a precedent for the other case. As of September 30, 2026, no
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
15
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 13 LONG-TERM DEBT
Long-term debt is summarized in the following table:
In millions | September 30, 2026 | December 31, 2025 | ||||||||||||
Term Loan F - due 2027 (a) | $ | $ | ||||||||||||
Term Loan F-2 - due 2031 (a) | ||||||||||||||
Term Loan A - due 2029 (a) | ||||||||||||||
Term Loan F-3 - due 2032 (a) | ||||||||||||||
| Securitization Program | ||||||||||||||
Financing Leases | ||||||||||||||
| Other Financing Arrangements | ||||||||||||||
Less: current portion | ( | ( | ||||||||||||
Total | $ | $ | ||||||||||||
(a) As of September 30, 2026 and December 31, 2025, amounts are presented net of an aggregate total of $3 million and $4 million, respectively, in unamortized debt issuance costs across the term loans.
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 September 30, 2026 and December 31, 2025, the Company had $100 million and $67 million of outstanding borrowings on the Revolving Credit Facility, respectively, and an available borrowing capacity of $300 million and $333 million, respectively. 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 2029. 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 September 30, 2026 was 4.54 %, and the average interest rate for the year ended December 31, 2025 was 5.28 %.
Term Loans
In May 2026, as a result of debt refinancing, the Company entered into a new senior secured term loan facility which provided an aggregate principal amount of $357 million (“Term Loan F-3”) maturing in 2032. A portion of the proceeds from Term Loan F-3 were used to fully repay the outstanding principal balance of Term Loan F of $257 million, effectively extending the maturity date of the loan. The remaining proceeds were used to repay $100 million of the amount outstanding under the
16
Revolving Credit Facility. The refinancing resulted in debt extinguishment costs of $2 million recorded within "Interest expense, net”.
Interest Rates
The interest rates applicable to the Term Loan F-3, 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 2.18 %, 2.28 %, 1.85 % and 1.85 %, respectively, payable monthly, with a SOFR floor of 0.00
Patronage Credits
We are receiving interest patronage credits under the Term Loan F-3, Term Loan F-2, and Term Loan F. 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-3 was approximately 5.18 % as of September 30, 2026, the effective net interest rate on the Term Loan F-2 was approximately 5.28 % and 5.07 % as of September 30, 2026 and December 31, 2025, respectively, and the effective net interest rate on the Term Loan F was 4.67 % as of December 31, 2025.
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.
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (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-2 | 2029 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Term Loan A | 2028 | |||||||||||||||||||||||||||||||||||||||||||||||||
(a) The total notional amounts of Term Loan F-2 and Term Loan A amortize quarterly until maturity.
Other Financing Arrangements
During the first quarter of 2026, the Company entered into a sale‑leaseback arrangement for certain land and warehouse assets which was accounted for as a financing transaction. Accordingly, the proceeds received of $11 million were recorded as a financing obligation, and the assets will continue to be recognized within “Plants, properties, and equipment, net”. No gain or loss was recognized in connection with the transaction.
As part of the arrangement, the counterparty is currently expanding the existing warehouse and will lease the expanded premises to the Company. Capital expenditures incurred by the counterparty to fund the expansion will be recognized within “Plants, properties and equipment, net” with an offsetting increase to the financing obligation. Non-cash additions to property, plant and equipment and the non-cash increase in long-term debt related to this arrangement were $21
17
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 September 30, 2026, we were in compliance with our debt covenants.
NOTE 14 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 nine months ended September 30, 2026 and September 30, 2025 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 15 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 September 30, 2026, 1,882,416 shares remain available for future grants.
Total stock-based compensation cost recognized by the Company was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
In millions | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
Total stock-based compensation expense (included in "Selling and administrative expense") | $ | $ | $ | $ | ||||||||||||||||||||||
As of September 30, 2026, $17 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 1.5 years.
18
NOTE 16 FINANCIAL INFORMATION BY BUSINESS SEGMENT
The Company’s two business segments, 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. As discussed in Note 7 Divestiture and Impairment of Business, the Company’s Europe business segment has been classified as discontinued operations and as a result is no longer reported as a business segment of the Company for any periods presented. Prior period results for our Latin America and North America business segments have been recast to reflect the reallocation of certain corporate costs which were previously allocated to our Europe business segment.
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. Business Segment Operating Profit (Loss) (non-GAAP) is net income (loss) from continuing operations (GAAP) plus the sum of income taxes, net interest expense, the impact of foreign exchange on an intercompany note receivable from our Brazilian subsidiary, and, when applicable for the periods reported, net special items.
The Company’s chief operating decision maker is the President and Chief Executive Officer. 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.
Sales by business segment are determined using a management approach and include inter-segment sales to our business segments in continuing operations and discontinued operations (which are eliminated in consolidation). Inter-segment sales to our discontinued operations were $4 million and $7 million for the three months and $17 million and $23 million for the nine months ended September 30, 2026 and 2025, respectively.
Information By Business Segment
Net Sales and Business Segment Operating Profit
Three Months Ended September 30, 2026:
In millions | Latin America | North America | Total | |||||||||||||||||
| Sales | $ | $ | $ | |||||||||||||||||
| Intersegment sales | ( | ( | ||||||||||||||||||
| Net sales | ||||||||||||||||||||
| Less: | ||||||||||||||||||||
| Cost of products sold and other | ||||||||||||||||||||
| Maintenance outages | ||||||||||||||||||||
| Selling and administrative expenses | ||||||||||||||||||||
| Depreciation, amortization and cost of timber harvested | ||||||||||||||||||||
| Add: | ||||||||||||||||||||
Other special items, net (a) | ||||||||||||||||||||
Business Segment Operating Profit | $ | $ | $ | |||||||||||||||||
Net income from continuing operations | $ | |||||||||||||||||||
| Income tax provision (benefit) | ( | |||||||||||||||||||
Interest expense, net | ||||||||||||||||||||
Foreign exchange (gain) loss on intercompany note (b) | ||||||||||||||||||||
Corporate special items, net (a) | ||||||||||||||||||||
Other special items, net (a) | ||||||||||||||||||||
| Business Segment Operating Profit | $ | |||||||||||||||||||
(b) Unallocated gain related to the foreign exchange on an intercompany note receivable from our Brazilian subsidiary, which is recorded within “Cost of products sold”.
19
Nine Months Ended September 30, 2026:
In millions | Latin America | North America | Total | |||||||||||||||||
| Sales | $ | $ | $ | |||||||||||||||||
| Intersegment sales | ( | ( | ||||||||||||||||||
| Net sales | ||||||||||||||||||||
| Less: | ||||||||||||||||||||
| Cost of products sold and other | ||||||||||||||||||||
| Maintenance outages | ||||||||||||||||||||
| Selling and administrative expenses | ||||||||||||||||||||
| Depreciation, amortization and cost of timber harvested | ||||||||||||||||||||
| Add: | ||||||||||||||||||||
Other special items, net (a) | ( | |||||||||||||||||||
Business Segment Operating Profit | $ | $ | $ | |||||||||||||||||
Net income from continuing operations | $ | |||||||||||||||||||
| Income tax provision (benefit) | ||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||
Foreign exchange (gain) loss on intercompany note (b) | ( | |||||||||||||||||||
Corporate special items, net (a) | ||||||||||||||||||||
Other special items, net (a) | ||||||||||||||||||||
| Business Segment Operating Profit | $ | |||||||||||||||||||
(a) See table below for the effects of special items.
(b) Unallocated gain related to the foreign exchange on an intercompany note receivable from our Brazilian subsidiary, which is recorded within “Cost of products sold”.
Three Months Ended September 30, 2025:
In millions | Latin America | North America | Total | |||||||||||||||||
| Sales | $ | $ | $ | |||||||||||||||||
| Intersegment sales | ( | ( | ||||||||||||||||||
| Net sales | ||||||||||||||||||||
| Less: | ||||||||||||||||||||
| Cost of products sold and other | ||||||||||||||||||||
| Maintenance outages | ||||||||||||||||||||
| Economic downtime | ||||||||||||||||||||
| Selling and administrative expenses | ||||||||||||||||||||
| Depreciation, amortization and cost of timber harvested | ||||||||||||||||||||
| Add: | ||||||||||||||||||||
Other special items, net (a) | ||||||||||||||||||||
Business Segment Operating Profit | $ | $ | $ | |||||||||||||||||
Net income from continuing operations | $ | |||||||||||||||||||
| Income tax provision (benefit) | ||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||
Corporate special items, net (a) | ||||||||||||||||||||
Other special items, net (a) | ||||||||||||||||||||
| Business Segment Operating Profit | $ | |||||||||||||||||||
(a) See table below for the effects of special items.
20
Nine Months Ended September 30, 2025:
In millions | Latin America | North America | Total | |||||||||||||||||
| Sales | $ | $ | $ | |||||||||||||||||
| Intersegment sales | ( | ( | ||||||||||||||||||
| Net sales | ||||||||||||||||||||
| Less: | ||||||||||||||||||||
| Cost of products sold and other | ||||||||||||||||||||
| Maintenance outages | ||||||||||||||||||||
| Economic downtime | ||||||||||||||||||||
| Selling and administrative expenses | ||||||||||||||||||||
| Depreciation, amortization and cost of timber harvested | ||||||||||||||||||||
| Add: | ||||||||||||||||||||
Other special items, net (a) | ||||||||||||||||||||
Business Segment Operating Profit | $ | $ | $ | |||||||||||||||||
Net income from continuing operations | $ | |||||||||||||||||||
| Income tax provision (benefit) | ||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||
Corporate special items, net (a) | ||||||||||||||||||||
Other special items, net (a) | ||||||||||||||||||||
| Business Segment Operating Profit | $ | |||||||||||||||||||
(a) See table below for the effects of special items.
Effects of Net Special Items Expense (Income)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| In millions | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Professional and legal fees primarily related to our plan to sell the Europe business | $ | $ | $ | $ | ||||||||||||||||||||||
| Severance charges | ||||||||||||||||||||||||||
| Other charges | ||||||||||||||||||||||||||
| Corporate special items | ||||||||||||||||||||||||||
| Georgetown mill offtake termination | ||||||||||||||||||||||||||
| Brazil environmental reserve adjustment | ( | |||||||||||||||||||||||||
| Brazil foreign value-added tax refund | ( | |||||||||||||||||||||||||
| Other special items, net | ||||||||||||||||||||||||||
| Net special items expense (income) | $ | $ | $ | $ | ||||||||||||||||||||||
Assets
In millions | September 30, 2026 | December 31, 2025 | ||||||||||||
Latin America | $ | $ | ||||||||||||
North America | ||||||||||||||
Corporate and other (a) | ||||||||||||||
Assets | $ | $ | ||||||||||||
(a) Includes corporate assets and assets of businesses held for sale.
21
Capital Spending
| Nine Months Ended September 30, | ||||||||||||||
In millions | 2026 | 2025 | ||||||||||||
Latin America | $ | $ | ||||||||||||
North America | ||||||||||||||
| Corporate | ||||||||||||||
Capital Spending | $ | $ | ||||||||||||
22
ITEM 2. 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 condensed consolidated financial statements and related notes included in Financial Information of this Quarterly Report on Form 10-Q (this “Form 10-Q”) and the Company’s Form 10-K for the three years ended December 31, 2025, 2024 and 2023. 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. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Form 10-Q and in our 2025 Form 10-K, particularly under the headings Risk Factors and Forward-Looking Statements.
EXECUTIVE SUMMARY
Third quarter 2026 net income from continuing operations was $85 million ($2.13 per diluted share) compared with $71 million ($1.76 per diluted share) for the third quarter of 2025. Net sales from continuing operations were $645 million in the current quarter compared with $662 million in the prior year. Cash provided by operating activities from continuing operations was $70 million compared to $114 million in the third quarter of last year. Adjusted EBITDA was $128 million compared to $158 million in the third quarter of 2025. Free cash flow was $16 million compared to $64 million in the third quarter of 2025.
Comparing our performance in the third quarter of 2026 to the prior year, volume decreased, primarily due to lower North America volume with the termination of the Riverdale mill supply agreement. Price and mix were favorable in both North America and Latin America. Operations and other costs as well as input and transportation costs were unfavorable. We continued to return cash to shareowners through an $18 million dividend payment during the quarter.
On November 6, 2026, we announced we have entered into exclusive negotiations with a buyer after signing a put option agreement that creates a binding offer to acquire our Europe business. We believe this potential transaction represents an important strategic step for our Europe business and Sylvamo. In Europe, it would create the opportunity to move forward with an owner experienced in corporate carveouts and positioning businesses for long-term success. After the proposed transaction, Sylvamo will be a more focused company, with greater ability to invest in our business, strengthen our performance and pursue world-class excellence.
Divestiture of European Operations
During the third quarter of 2026, management committed to a plan to sell the Company’s European business segment. As a result, all current and historical operating results of the European business segment are presented as “Discontinued operations, net of taxes” in the condensed consolidated statement of operations and the notes to the condensed consolidated financial statements. All historical assets and liabilities of the European business segment are classified as current and long-term assets and liabilities held for sale in the accompanying condensed consolidated balance sheet. We recorded a pre-tax charge of $342 million ($342 million after taxes) for the impairment of the Europe business segment and a pre-tax gain of $67 million ($67 million after taxes) which includes an expected cumulative foreign currency translation gain and other accumulated other comprehensive loss related to our Europe business segment, which will be recognized upon the sale of the business. See Note 7 Divestiture and Impairment of Business for further details.
Our operations in Europe include two integrated mills in the region, one in Saillat, France and one in Nymölla, Sweden. Operations from these mills represented approximately 23% of our net sales for the nine months ended September 30, 2026 and 17% of our long-lived assets as of September 30, 2026.
23
RESULTS OF OPERATIONS
The following summarizes our results of operations for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
NET SALES | $ | 645 | $ | 662 | $ | 1,827 | $ | 1,906 | ||||||||||||||||||
COSTS AND EXPENSES | ||||||||||||||||||||||||||
Cost of products sold (exclusive of depreciation, amortization and cost of timber harvested shown separately below) | 440 | 443 | 1,346 | 1,360 | ||||||||||||||||||||||
Selling and administrative expenses | 82 | 61 | 212 | 190 | ||||||||||||||||||||||
Depreciation, amortization and cost of timber harvested | 36 | 41 | 105 | 110 | ||||||||||||||||||||||
Taxes other than payroll and income taxes | 5 | 5 | 15 | 14 | ||||||||||||||||||||||
Interest expense, net | 11 | 7 | 30 | 24 | ||||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 71 | 105 | 119 | 208 | ||||||||||||||||||||||
Income tax provision (benefit) | (14) | 34 | 2 | 48 | ||||||||||||||||||||||
| NET INCOME FROM CONTINUING OPERATIONS | 85 | 71 | 117 | 160 | ||||||||||||||||||||||
| Discontinued operations, net of taxes | (284) | (14) | (330) | (61) | ||||||||||||||||||||||
| NET INCOME (LOSS) | $ | (199) | $ | 57 | $ | (213) | $ | 99 | ||||||||||||||||||
Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
Net Sales
Net sales for the three months ended September 30, 2026 decreased by $17 million compared to the same period in 2025. The decrease was largely due to lower sales volume ($49 million), primarily driven by the termination of the Riverdale supply agreement, which was partially offset by a favorable foreign exchange impact ($8 million) and higher sales price and mix ($24 million). Additional information on sales by business segment, excluding inter-segment eliminations, is provided in the section titled Business Segment Results.
Cost of Products Sold
Cost of products sold for the three months ended September 30, 2026 decreased by $3 million compared to the same period in 2025. The decrease was primarily driven by volume impacts ($33 million), which was mostly offset by higher input costs, primarily for fiber and distribution costs ($23 million) and operating costs ($6 million).
Selling and Administrative Expenses
Selling and administrative expenses for the three months ended September 30, 2026 increased by $21 million compared to the same period in 2025. The increase was primarily due to higher incentive compensation expense ($11 million) and the net impact of certain special items, including professional and legal fees primarily related to our plan to sell the Europe business ($3 million).
Depreciation, Amortization and Cost of Timber Harvested
Depreciation, amortization and cost of timber harvested for the three months ended September 30, 2026 decreased by $5 million compared to the same period in 2025 primarily due to lower timber depletion expense.
Taxes Other Than Payroll and Income Taxes
Taxes other than income taxes of $5 million for the three months ended September 30, 2026 was consistent compared to $5 million in the same period in 2025.
24
Interest Expense, Net
Interest expense, net for the three months ended September 30, 2026 increased by $4 million compared to the same period in 2025. This is primarily due to higher interest expense, driven by higher interest rates and weighted average borrowings, which was partially offset by higher capitalization of interest costs for construction projects in 2026.
Income Tax Provision
Income tax provision for the three months ended September 30, 2026 decreased by $48 million compared to the same period in 2025. This is primarily due to a tax benefit related to our investment in our European subsidiaries ($36 million) and lower tax expense resulting from lower pre-tax income.
Discontinued Operations
Income (loss) from discontinued operations for the three months ended September 30, 2026 includes a net pre-tax charge of $342 million ($342 million after taxes) for the impairment of the Europe business segment and a pre-tax gain of $67 million ($67 million after taxes) which includes an expected cumulative foreign currency translation gain and other accumulated other comprehensive loss related to our Europe business segment, which will be recognized upon the sale of the business. See Note 7 Divestiture and Impairment of Business to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.
Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
Net Sales
Net sales for the nine months ended September 30, 2026 decreased by $79 million compared to the same period in 2025. The change was largely attributable to lower sales volume ($125 million), primarily driven by the termination of the Riverdale supply agreement, which was partially offset by higher sales price and mix ($17 million) and favorable foreign exchange impacts ($29 million). Additional information on sales by business segment, excluding inter-segment eliminations, is provided in the section titled Business Segment Results.
Cost of Products Sold
Cost of products sold for the nine months ended September 30, 2026 decreased by $14 million compared to the same period in 2025. The change was primarily driven by volume impacts ($87 million) and a favorable impact from foreign exchange on an intercompany note receivable from our Brazilian subsidiary ($19 million). These decreases were offset by higher input costs ($56 million), mainly related to distribution, energy, chemicals and purchased fiber costs, and operating costs ($37 million).
Selling and Administrative Expenses
Selling and administrative expenses for the nine months ended September 30, 2026 increased by $22 million compared to the same period in 2025. The increase was primarily due to higher incentive compensation expense ($9 million), the result of a provision for credit losses related to outstanding customer receivables ($3 million) and the net impact of certain special items, including professional and legal fees primarily related to our plan to sell the Europe business ($7 million).
Depreciation, Amortization and Cost of Timber Harvested
Depreciation, amortization and cost of timber harvested for the nine months ended September 30, 2026 decreased by $5 million compared to the same period in 2025 primarily due to lower timber depletion expense.
Taxes Other Than Payroll and Income Taxes
Taxes other than payroll and income taxes of $15 million for the nine months ended September 30, 2026 was relatively consistent compared to $14 million in the same period in 2025.
25
Interest Expense, Net
Interest expense, net for the nine months ended September 30, 2026 increased by $6 million compared to the same period in 2025. This is primarily due to debt extinguishment costs ($2 million) and higher interest expense ($9 million), driven by higher interest rates and weighted average borrowings, which were partially offset by higher interest income and the capitalization of interest costs for construction projects.
Income Taxes
Income tax provision for the nine months ended September 30, 2026 decreased by $46 million compared to the same period in 2025. The change is primarily attributable to a tax benefit related to our investment in our European subsidiaries ($36 million) and lower tax expense resulting from lower pre-tax income, partially offset by additional tax expense related to a change in valuation allowances for certain foreign deferred tax assets ($15 million).
Discontinued Operations
Income (loss) from discontinued operations for the nine months ended September 30, 2026 includes a net pre-tax charge of $342 million ($342 million after taxes) for the impairment of the Europe business segment and a pre-tax gain of $67 million ($67 million after taxes) which includes an expected cumulative foreign currency translation gain and other accumulated other comprehensive loss related to our Europe business segment, which will be recognized upon the sale of the business. See Note 7 Divestiture and Impairment of Business to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.
BUSINESS SEGMENT RESULTS
Reconciliation of Net Income from Continuing Operations to Business Segment Operating Profit
Management provides business segment operating profit, a non-GAAP financial measure, to supplement our GAAP financial information, and it should be considered in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Management believes that business segment operating profit provides investors and analysts useful insights into our operating performance. Business segment operating profit is reconciled to net income from continuing operations, the most directly comparable GAAP measure.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
In millions | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Net Income (Loss) | $ | (199) | $ | 57 | $ | (213) | $ | 99 | |||||||||||||||||||||
| Less: Discontinued operations, net of tax | (284) | (14) | (330) | (61) | |||||||||||||||||||||||||
Net Income from Continuing Operations | 85 | 71 | 117 | 160 | |||||||||||||||||||||||||
| Income tax provision (benefit) | (14) | 34 | 2 | 48 | |||||||||||||||||||||||||
Interest expense, net | 11 | 7 | 30 | 24 | |||||||||||||||||||||||||
| Foreign exchange (gain) loss on intercompany note | 1 | — | (19) | — | |||||||||||||||||||||||||
Net special items expense (b) | 4 | 1 | 8 | 3 | |||||||||||||||||||||||||
Business Segment Operating Profit (a) | $ | 87 | $ | 113 | $ | 138 | $ | 235 | |||||||||||||||||||||
Latin America | $ | 22 | $ | 33 | $ | 5 | $ | 56 | |||||||||||||||||||||
North America | 65 | 80 | 133 | 179 | |||||||||||||||||||||||||
Business Segment Operating Profit (a) | $ | 87 | $ | 113 | $ | 138 | $ | 235 | |||||||||||||||||||||
(a) Business Segment Operating Profit (non-GAAP) is net income from continuing operations (GAAP) plus the sum of income taxes, net interest expense, the impact of foreign exchange on an intercompany note receivable from our Brazilian subsidiary, and, when applicable for the periods reported, net special items.
(b) See Note 16 Financial Information by Business Segment for effects of net special items expense (income).
26
Overview
Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
The following tables present sales, excluding inter-segment eliminations, and operating profit (loss), which is the Company’s measure of business segment profitability, for each of the Company’s segments. See Note 16 Financial Information by Business Segment for more information on the Company’s segments.
27
Latin America
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
In millions | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
Sales | $ | 258 | $ | 228 | $ | 664 | $ | 634 | ||||||||||||||||||
Operating Profit | $ | 22 | $ | 33 | $ | 5 | $ | 56 | ||||||||||||||||||
Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
Our Latin America business segment sales increased $30 million compared to the same period in 2025, primarily due to higher volumes ($19 million), higher sales price and mix ($3 million) and favorable foreign exchange ($8 million).
Operating profit for Latin America was $11 million lower than the same period in 2025, primarily due to higher operating ($8 million) and input costs ($10 million), primarily for purchased fiber and distribution costs, which were partially offset by higher sales price and mix ($3 million) and higher volumes ($4 million).
Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
Our Latin America business segment sales increased $30 million compared to the same period in 2025, primarily due to higher volumes ($6 million) and favorable foreign exchange ($29 million) which were partially offset by lower sales price and mix ($5 million).
Operating profit for Latin America was $51 million lower than the same period in 2025, primarily due to higher operating ($24 million) and input costs ($19 million), primarily for purchased fiber and distribution costs, lower sales price and mix ($5 million) and higher planned maintenance outages ($3 million).
North America
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
In millions | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
Sales | $ | 414 | $ | 450 | $ | 1,215 | $ | 1,307 | ||||||||||||||||||
Operating Profit | $ | 65 | $ | 80 | $ | 133 | $ | 179 | ||||||||||||||||||
Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
Our North America business segment sales decreased $36 million compared to the same period in 2025, primarily due to lower volumes ($57 million), primarily driven by the termination of the Riverdale supply agreement, which were partially offset by higher sales price and mix ($21 million).
Operating profit for North America was $15 million lower than the same period in 2025, primarily due to lower volumes ($20 million), higher operating costs ($3 million) and higher input costs ($13 million), primarily for distribution costs which were partially offset by higher sales price and mix ($21 million).
Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
Our North America business segment sales decreased $92 million compared to the same period in 2025, primarily due to lower volumes ($114 million), primarily driven by the termination of the Riverdale supply agreement, partially offset by higher sales price and mix ($22 million).
Operating profit for North America was $46 million lower than the same period in 2025, primarily due to higher input costs ($37 million), primarily due to higher energy, chemicals and distribution costs, and lower volumes ($38 million) which were partially offset by higher sales price and mix ($22 million), lower operating costs ($3 million), lower unabsorbed costs due to economic downtime ($3 million) and lower planned maintenance outages ($1 million).
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OTHER NON-GAAP MEASURES
Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA
Management provides adjusted EBITDA and adjusted EBITDA margin, non-GAAP financial measures, to supplement our GAAP financial information, and they should be considered in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Management uses these measures in managing the operating performance of our business and believes that adjusted EBITDA along with adjusted EBITDA margin provide investors and analysts meaningful insights into our operating performance and is a relevant metric for the third-party debt. Adjusted EBITDA is reconciled to net income (loss) from continuing operations, the most directly comparable GAAP measure. Adjusted EBITDA margin (adjusted EBITDA divided by net sales) is reconciled to net income (loss) from continuing operations margin (net income (loss) from continuing operations divided by net sales), the most directly comparable GAAP measure.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| In millions | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Net Income (Loss) | $ | (199) | $ | 57 | $ | (213) | $ | 99 | ||||||||||||||||||
| Less: Discontinued operations, net of taxes | (284) | (14) | (330) | (61) | ||||||||||||||||||||||
| Net Income from Continuing Operations | 85 | 71 | 117 | 160 | ||||||||||||||||||||||
| Income tax provision (benefit) | (14) | 34 | 2 | 48 | ||||||||||||||||||||||
| Interest expense, net | 11 | 7 | 30 | 24 | ||||||||||||||||||||||
| Depreciation, amortization and cost of timber harvested | 36 | 41 | 105 | 110 | ||||||||||||||||||||||
| Stock-based compensation | 5 | 4 | 10 | 16 | ||||||||||||||||||||||
| Foreign exchange (gain) loss on intercompany note | 1 | — | (19) | — | ||||||||||||||||||||||
Net special items expense (b) | 4 | 1 | 8 | 3 | ||||||||||||||||||||||
Adjusted EBITDA (a) | $ | 128 | $ | 158 | $ | 253 | $ | 361 | ||||||||||||||||||
| Net Sales | $ | 645 | $ | 662 | $ | 1,827 | $ | 1,906 | ||||||||||||||||||
| Net Income Margin From Continuing Operations | 13 | % | 11 | % | 6 | % | 8 | % | ||||||||||||||||||
| Adjusted EBITDA Margin | 20 | % | 24 | % | 14 | % | 19 | % | ||||||||||||||||||
(a) Adjusted EBITDA (non-GAAP) is net income (loss) from continuing operations (GAAP) plus the sum of income taxes, net interest expense, depreciation, amortization and cost of timber harvested, stock-based compensation, the impact of foreign exchange on an intercompany note receivable from our Brazilian subsidiary, and, when applicable for the periods reported, net special items.
(b) See Note 16 Financial Information by Business Segment for effects of net special items expense (income).
Reconciliation of Cash Provided by Operating Activities from Continuing Operations to Free Cash Flow
Management provides free cash flow, a non-GAAP financial measure, to supplement our GAAP financial information, and it should be considered in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Management believes that free cash flow is useful to investors as a liquidity measure because it measures the amount of cash generated that is available, after reinvesting in the business, to maintain a strong balance sheet and service debt, and return cash to shareowners. It should not be inferred that the entire free cash flow amount is 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. Free cash flow is reconciled to cash provided by operating activities from continuing operations, the most directly comparable GAAP measure.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| In millions | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Cash provided by operating activities from continuing operations | $ | 70 | $ | 114 | $ | 141 | $ | 240 | ||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Cash invested in capital projects | (54) | (50) | (156) | (142) | ||||||||||||||||||||||
| Free Cash Flow | $ | 16 | $ | 64 | $ | (15) | $ | 98 | ||||||||||||||||||
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The non-GAAP financial measures presented in this Form 10-Q (business segment operating profit, adjusted EBITDA, adjusted EBITDA margin and free cash flow) 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. In addition, because not all companies utilize identical calculations, the Company’s presentation of non-GAAP measures in this Form 10-Q may not be comparable to similarly titled measures disclosed by other companies, including companies in the same industry as the Company.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our ability to fund the Company’s cash needs depends on our ongoing ability to generate cash from operations and obtain financing on acceptable terms. Based upon our history of generating strong operating cash flow, we believe we will be able to meet our short-term liquidity needs. We believe we will meet known or reasonably likely future cash requirements through the combination of cash flows from operating activities, available cash balances and available borrowings through the issuance of third-party debt, as needed.
A major factor in our liquidity and capital resource planning is our generation of operating cash flow, which is highly sensitive to changes in the pricing and demand for our products. While changes in key operating cash costs, such as raw materials, energy, mill outages and distribution expenses do have an effect on operating cash generation, we believe that our focus on commercial and operational excellence, as well as our ability to manage costs and working capital, will provide sufficient cash flow generation to meet our operational and capital spending needs.
The terms of the agreements governing our debt contain customary limitations as well as other provisions. These provisions may also restrict our business and, in the event we cannot meet the terms of those provisions, may adversely impact our financial condition, results of operations or cash flows.
Operating Activities
Cash provided by operating activities from continuing operations totaled $141 million for the nine months ended September 30, 2026, compared with cash provided by operating activities from continuing operations of $240 million for the nine months ended September 30, 2025. The decrease in cash provided by operating activities from continuing operations in 2026 relates primarily to lower net income and timing of cash flows related to working capital.
Cash used for working capital components (accounts and notes receivable, inventories, accounts payable and accrued liabilities, and other) was $50 million for the nine months ended September 30, 2026, compared with cash used for working capital components of $40 million for the nine months ended September 30, 2025. The nine months ended September 30, 2026 working capital components primarily reflect $54 million of cash provided by our accounts and notes receivable, offset by $92 million, $1 million and $11 million of cash used for our inventories, accounts payable and accrued liabilities and other operating activities, respectively. The nine months ended September 30, 2025 working capital components primarily reflect $76 million of cash provided by our accounts and notes receivable, offset by $19 million, $51 million and $46 million of cash used for our inventories, accounts payable and accrued liabilities, and other operating activities, respectively.
Investment Activities
The total cash used for investing activities from continuing operations for the nine months ended September 30, 2026 increased from the nine months ended September 30, 2025, due to increased capital spending in the current year.
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The following table shows capital spending by business segment:
| Nine Months Ended September 30, | ||||||||||||||
In millions | 2026 | 2025 | ||||||||||||
Latin America | $ | 71 | $ | 92 | ||||||||||
North America | 85 | 49 | ||||||||||||
| Corporate | — | 1 | ||||||||||||
Capital Spending | $ | 156 | $ | 142 | ||||||||||
Capital spending primarily consists of purchases of machinery and equipment related to our global mill operations and reforestation and timber purchase costs in Latin America.
Financing Activities
Cash provided by financing activities from continuing operations for the nine months ended September 30, 2026 primarily reflects the payments of $37 million, $9 million, $8 million, $213 million, and $4 million on our outstanding principal debt balances for the AR Securitization, Term Loan F-2, Term Loan A, Revolving Credit Facility, and Term Loan F-3, respectively. These amounts are primarily offset by draws on our AR Securitization and Revolving Credit Facility of $48 million and $246 million, respectively, as well as a receipt of $11 million from other financing arrangements. Additionally, a payment of $257 million was made to settle the Term Loan F, which was funded by the issuance of Term Loan F-3 for $357 million. During the nine months ended September 30, 2026 the Company also paid $54 million in dividends and repurchased no shares pursuant to our share repurchase program. Cash used for financing activities from continuing operations for the nine months ended September 30, 2025 primarily reflects the payments of $29 million, $8 million, $9 million, and $16 million on our outstanding principal debt balances for the AR Securitization, Term Loan A, Term Loan F-2, and Revolving Credit Facility, respectively. These amounts are primarily offset by draws on our AR Securitization and Revolving Credit Facility of $41 million and $23 million, respectively. During the nine months ended September 30, 2025 the Company also paid $55 million in dividends and repurchased $82 million of our shares pursuant to our share repurchase program.
Contractual Obligations
Our 2025 Form 10-K included disclosures of our contractual obligations and commitments as of December 31, 2025. We continue to make the contractually required payments, and, therefore, the 2025 obligations and commitments described in our 2025 Form 10-K have been reduced by the required payments.
Capital Expenditures
For the nine months ended September 30, 2026, we have invested approximately $156 million, or 8.5% of net sales, in total capital expenditures. Over that period, we spent approximately $99 million, or 5.4% of net sales, in maintenance, regulatory and reforestation capital expenditures, and approximately $57 million, or 3.1% of net sales, in high-return capital projects. Our annual maintenance, regulatory and reforestation capital expenditures are expected to be in the range of approximately $140 to $165 million per year (before inflation) for the next several years, which we believe will be sufficient to maintain our operations and productivity. In addition, we expect to spend approximately $105 million on high-return projects in 2026.
PILLAR TWO DIRECTIVE
The Organization for Economic Co-operation and Development (“OECD”) Pillar Two Model Rules established a minimum global effective tax rate of 15% on country-by-country profits of large multinational companies. European Union member states along with many other countries have adopted or expect to adopt the OECD Pillar Two Model effective January 1, 2024, or thereafter. The OECD and other countries continue to publish guidelines and legislation that include transition and safe harbor rules. We continue to monitor new legislative changes and assess the global impact of the Pillar Two Model Rules. Based on our initial assessment, Pillar Two should not have a material impact to the Company’s income tax provision.
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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.
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 and income taxes.
The Company has included in the 2025 Form 10-K a discussion of these critical accounting policies, which are important to the portrayal of the Company’s financial condition and results of operations and require management’s judgments. The Company has not made any changes in these critical accounting policies during the first nine months of 2026.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains information that includes or is based upon forward-looking statements. Forward-looking statements forecast or state expectations concerning future events. These statements often can be identified by the fact that they do not relate strictly to historical or current facts. 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 relate to future periods. Some examples of forward-looking statements include those relating to our business and operating outlook, future obligations and anticipated expenditures.
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. They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors that are difficult to predict. Although 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: global or regional economic, civil, political conditions or trade developments, including protective trade measures and the Middle East conflict; adverse climate and weather conditions, including risks to our forestlands and mills from drought, fires or floods; 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; disruptions at 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 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. Risk Factors of our 2025 Form 10-K, as such disclosures may be amended, supplemented or superseded from time to time by other reports we file with the U.S. Securities and Exchange Commission (the “SEC”), including subsequent annual reports on Form 10-K and quarterly reports on Form 10-Q.
We assume no obligation to update any forward-looking statements made in this quarterly report to reflect subsequent events or circumstances or actual outcomes.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information relating to quantitative and qualitative disclosures about market risk is shown on page 41 of the Company’s 2025 Form 10-K, which information is incorporated herein by reference. There have been no material changes in the Company’s exposure to market risk since December 31, 2025.
ITEM 4. CONTROLS AND PROCEDURES
Management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2026. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date and
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designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is: recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting:
In the third quarter of 2026, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Sylvamo may be involved in legal proceedings arising from time to time in the ordinary course of business. Sylvamo is not involved in any legal proceedings that we believe will result, individually or in the aggregate, in a material adverse effect upon our financial condition or results of operations. Note 11 Income Taxes and Note 12 Commitments and Contingent Liabilities of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q are incorporated into this Item 1 by reference.
Item 103 of Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions, unless we reasonably believe the monetary sanctions will not equal or exceed a threshold of $1 million (which is the threshold we elected to use as permitted by this regulation). The matters set forth in Note 12 Commitments and Contingent Liabilities and incorporated herein are disclosed in accordance with such requirement.
ITEM 1A. RISK FACTORS
The risk factors that affect our business and financial results are set forth under Part I, Item 1A, “Risk Factors,” in our 2025 Form 10-K. There have been no material changes to the risk factors described in the 2025 Form 10-K, except for the risk noted below. The risk factors in Item 1A. Risk Factors in the 2025 Form 10-K and the risks described in this Form 10-Q or our other SEC filings could cause our actual results to differ materially from those stated in any forward-looking statements.
We may not complete the proposed sale of the Company’s Europe business.
On November 6, 2026, the Company announced that it had entered into a put option agreement with Midas Atlantic Partners, in partnership with The Najafi Companies, for a binding offer to acquire the Company’s Europe business. The Offer is for the business to be transferred to Midas Atlantic Partners with an agreed level of working capital and cash in exchange for the right to receive 20% of future distributions of the business. The Offer binds the buyer, but not the Company.
There is no assurance that the Offer will result in a sale of the Company’s Europe business. The Company’s ability to conduct the proposed sale depends on various factors, some beyond our control. The Company’s entry into a share purchase agreement (“SPA”), as proposed by the Option Agreement, is subject to the Company’s election to exercise the put option after certain conditions have been met, including our completion of required consultation processes with works councils and employee representatives in accordance with applicable law. We will complete these consultation processes before making any final decision on exercising the put option and entering into an SPA. Definitive SPA terms and completion of the transaction on a timely basis, if at all, would be subject to various factors and conditions, both known and unknown, including the satisfaction of conditions related to work councils’ approvals, the parties’ obtaining required regulatory approvals, and the satisfaction or waiver of other closing conditions.
Even if the Company were to complete the proposed sale, it might not have a positive effect on shareowner value and the Company might not realize the anticipated benefits of the transaction. The sale process and any resulting sale could have known and unknown adverse effects on the Company, including diverting management’s attention, disrupting our business, and exposing us to litigation. The Company has incurred, and will continue to incur, significant costs and expenses in connection with the proposed sale. Speculation and perceived uncertainties about developments related to the proposed sale could also cause volatility in the market price of the Company’s common stock.
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ITEM 2. 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) | ||||||||||
| July 1, 2026 - July 31, 2026 | 2,155 | $ | 37.80 | — | $ | 150 | ||||||||
| August 1, 2026 - August 31, 2026 | 1,216 | $ | 37.41 | — | $ | 150 | ||||||||
| September 1, 2026 - September 30, 2026 | 1,429 | $ | 35.92 | — | $ | 150 | ||||||||
| Total | 4,800 | — | ||||||||||||
(a) 4,800 shares were acquired from employees from share withholdings under the Company’s long term incentive compensation program.
On May 18, 2022, the Board approved a share repurchase program under which the Company may purchase up to an aggregate amount of $150 million of shares of its common stock (the “Repurchase Program”). In 2023 and again in the third quarter of 2025, the Board authorized an additional $150 million for the Repurchase Program, bringing the total program capacity to $450 million. As of September 30, 2026, $150 million remains available for repurchases. Pursuant to the Repurchase Program, the Company may repurchase in amounts, at prices and at such times as it deems appropriate, subject to market conditions and other considerations, including all applicable legal requirements. Repurchases may include purchases on the open market or privately negotiated transfers, under Rule 10b5-1 trading plans, under accelerated share repurchase programs, in tender offers and otherwise. The Repurchase Program does not obligate the Company to acquire any particular amount of shares of its common stock and may be modified or suspended at any time at the Company’s discretion. The Company did not repurchase any shares during the nine months ended September 30, 2026.
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ITEM 6. EXHIBITS
| 31.1* | Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 31.2* | Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 32** | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document. | |||||||
| 101.SCH XBRL | Taxonomy Extension Schema. | |||||||
| 101.CAL XBRL | Taxonomy Extension Calculation Linkbase. | |||||||
| 101.DEF XBRL | Taxonomy Extension Definition Linkbase. | |||||||
| 101.LAB XBRL | Taxonomy Extension Label Linkbase. | |||||||
| 101.PRE XBRL | Extension Presentation Linkbase. | |||||||
| 104. | Cover Page Interactive Data File (formatted as Inline XBRL, and contained in Exhibit 101). | |||||||
* Filed herewith
** Furnished herewith
Items 3, 4 and 5 are not applicable and have been omitted.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
| SYLVAMO CORPORATION | ||||||||
Date: November 6, 2026 | By: | /s/ Kevin W. Ferguson | ||||||
Name: | Kevin W. Ferguson | |||||||
Title: | Vice-President and Controller | |||||||
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