Key Points

• GAAP revenue fell to $794 million in Q2 2025, missing estimates by 3.9% and declining 14.9% year-over-year (GAAP).

• GAAP earnings per share were $0.37 in Q2 2025, below consensus and EPS was down 63.7% year over year.

• Segment results diverged: Europe swung to an operating loss (business segment operating profit, non-GAAP). Latin America operating profit (GAAP) collapsed to $2 million, while North America margins held up best.

• These 10 stocks could mint the next wave of millionaires ›

Sylvamo (NYSE:SLVM), a global paper producer with operations spanning North America, Latin America, and Europe, reported results for the second quarter of fiscal 2025 on August 8, 2025. The earnings release showed that both GAAP revenue and earnings missed Wall Street expectations, with reported GAAP EPS of $0.37 (analyst consensus: $0.41) and GAAP revenue was $794 million versus an estimate of $826.07 million. Compared to the prior-year period, GAAP revenue declined by 14.9%. The quarter saw heightened planned maintenance costs and continued weak market demand in key regions. Overall, the period was marked by significant operational pressures and margin declines, particularly in the European and Latin American segments.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Focus

Sylvamo is a leading producer of uncoated freesheet paper, the type of paper used in office printers, copiers, and publishing. It operates mills in North America, Latin America, and Europe, emphasizing cost efficiency and a strong brand portfolio. The company serves a global customer base.

In recent years, Sylvamo has focused on five key areas: maintaining low-cost operations, bolstering its portfolio of top-tier paper brands, leveraging its geographical reach, advancing sustainability and regulatory compliance, and managing pressure from intense industry competition. Its success relies heavily on operational efficiency, regional diversity, and continued investment in capital projects designed to improve productivity and profit margins.

Quarter in Review: Financial and Operational Developments

The second quarter was defined by significant operational headwinds, particularly from extensive planned maintenance outages. Management noted this was the company’s "heaviest planned maintenance outage quarter in over five years," impacting factory output and driving up costs, which contributed to the earnings and revenue shortfalls versus consensus GAAP estimates.

Segment performance showed sharp regional divergence. In Europe, net sales (GAAP) shrank from $206 million in Q2 2024 to $181 million. More notably, the region swung from an $8 million operating profit in Q2 2024 to a $38 million operating loss, with adjusted EBITDA turning negative. Management attributed the losses to maintenance outages, falling volumes, and unfavorable currency moves. Latin America faced a similar pattern: net sales (GAAP) declined to $207 million, and operating profit (GAAP) fell dramatically to $2 million from $37 million the year before. Planned maintenance and foreign exchange fluctuations were principal drivers here as well, muting any benefit from cost controls. By contrast, North America proved more resilient. The region’s business segment operating profit, while down year over year, improved sequentially and margins rebounded on the back of lower input and operating costs. However, even here, Sales volumes were lower and overall profit did not reach prior-year levels.

Adjusted EBITDA margin declined across the company, with margin compression in Europe and Latin America. Company-wide, adjusted EBITDA margin fell from 17.6% in Q2 2024 to 10.3% (non-GAAP). Cash flow also came under pressure, with free cash flow (non-GAAP) at negative $2 million compared to a $62 million inflow in Q2 2024. Much of this was attributed to the timing and size of maintenance activities in the first half of 2025, which are expected to subside in the second half of the year.

Industry market trends added to the challenge. Management reported that demand in Europe dropped 8% year-over-year in the first half of 2025. Latin American demand (excluding Brazil) fell 6% year-over-year in the first half of 2025, while Brazil saw a 6% upturn in demand in the first half of 2025 due to strong publishing demand. In North America, apparent demand was reported as flat year-over-year for the first half of 2025, but real demand was seen down 3–4% when adjusting for inventory effects and surging imports. Sylvamo noted that imports into the U.S. were up nearly 40% in the first half of 2025 compared to the first half of the prior year.

The quarter included no major product launches or brand updates. The company did, however, highlight continued work with leading customers and the launch of operational improvements at select European mills. There were no reported regulatory fines, and net special items were zero, though the period included a small foreign VAT refund and a tax settlement interest charge. Sylvamo returned $38 million to shareholders through dividends and share repurchases. The quarterly dividend was kept at $0.45 per share, remaining unchanged from previous periods.

Looking Ahead: Guidance and Investor Considerations

For the third quarter, management issued adjusted EBITDA (non-GAAP) guidance of $145 million to $165 million—a marked sequential increase as maintenance costs drop away and volume improves. Net income (GAAP) is projected between $59 million and $74 million. The company expects benefits from reduced planned maintenance outages (adding $66 million), better volumes, and stable input costs. However, it signals that pricing, particularly in Europe, will remain under pressure. No full-year earnings or revenue guidance was provided for fiscal 2025.

Investors should watch several critical factors over the coming quarters. Most of the year’s planned maintenance has now been completed (85% of full-year planned maintenance outages were completed as of Q2 2025), opening opportunities for margin recovery and better cash generation in the second half. Management is also prioritizing completion of its major Eastover mill capital project, which is expected to add over $50 million in annual adjusted EBITDA from 2026. On the risk side, demand trends for uncoated freesheet—especially in Europe and North America—will remain central, alongside persistent currency volatility and elevated industry competition.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,046%* — a market-crushing outperformance compared to 181% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of August 4, 2025

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.