Our products face strong competition as commodities and from industry consolidation.
Disruptions at our facilities or in transportation and logistics could increase our costs and impair our ability to operate and serve customers.
Our business depends on the continuous and efficient operation of our manufacturing facilities, the reliable performance of the equipment within those facilities, and the ability to process and fill customer orders. A material disruption at our corporate headquarters or at any of our mills -- whether affecting an entire facility, operations at multiple facilities, or one or more key machines -- could interrupt production, delay product deliveries, limit our ability to meet customer demand, and reduce sales.
Our facilities or equipment could experience unexpected downtime or cease operations as a result of a variety of events. Examples are natural disasters or severe weather; disruptions to water, energy or other utility supplies; shortages of raw materials, such as wood fiber, and other critical inputs; interruptions in transportation infrastructure (including roads, bridges, railways or ports); unscheduled maintenance outages; equipment failures or damage to paper‑making or other important equipment; prolonged power outages; or information technology or operational technology system failures, including those resulting from cybersecurity incidents affecting us or third parties with whom we do business. In addition, spills or releases of chemicals or other hazardous substances, explosions or damage involving boilers or other equipment, or damage caused by third parties operating on or near our facilities could result in shutdowns, repairs or corrective or punitive regulator actions.
Disruptions may also result from other third-party events that impact us, such as failures or delays by our third‑party service providers or a business partner’s labor disputes or workforce availability issues, or regulations or governmental action applicable to our or our business partners’ businesses. The frequency, severity or duration of any such disruptions could affect our production volumes, increase operating or repair costs, cause missed deliveries or require capital expenditures to restore operations. While we maintain maintenance programs, contingency plans and insurance coverage for certain risks, these measures may not prevent all disruptions or fully offset their financial impact.
the prices charged by our transportation providers, increasing our costs to produce and deliver our product to customers. In 2025, transportation markets remained relatively stable and we did not experience any material increased transportation costs or disruptions, but we cannot predict whether this stability will continue. Any of the circumstances described in this paragraph could cause us increased supply chain costs, increased costs to supply customers and loss of customers.
Failures or security breaches of our information technology systems could disrupt our operations, harm our business and result in regulatory non-compliance.
Our business operations rely upon secure information technology systems for data capture, processing, storage and
Labor disputes could disrupt our operations and increase our labor and operating costs.
Our business depends on our ability to attract, retain and develop skilled employees and management.
Environmental regulations could result in significant compliance costs, operational constraints and liabilities for non-compliance.
We are subject to extensive environmental regulation (including laws, rules, regulations and other governmental requirements) in the jurisdictions in which we operate -- Europe, Latin America and North America. Such regulations govern, among other things, air emissions, water discharges, waste management, land use and remediation obligations. Environmental regulations continue to evolve, and regulatory authorities may adopt or more actively enforce environmental regulations, including those affecting air quality, water use and quality, emissions, permitting, reporting or facility operations. Compliance with existing environmental requirements, or with new or more stringent standards that may be adopted, could increase our operating and capital costs or restrict certain aspects of our manufacturing operations.
We anticipate continued or increased activity by local, state, federal and international regulators regarding environmental matters and policies affecting our operations. Changes in regulatory frameworks or enforcement practices could require us to modify or install additional controls, make capital investments, change operating practices, obtain permits or take other required actions. In certain circumstances, compliance obligations could result in production constraints, temporary shutdowns or the curtailment of operations at facilities.
We may be subject to liabilities, fines, penalties or other enforcement actions, as well as third-party litigation, arising from alleged violations of current or future environmental regulations, permits or other regulatory requirements, including obligations relating to cleanup, remediation or other corrective actions at our facilities or sites for which we may be responsible. The cost of compliance, remediation or other corrective action, litigation or penalties associated with environmental matters could be material. The amount and timing of environmental expenditures is difficult to predict. In some cases, liability may be imposed without regard to contribution or whether we knew of or caused the environmental issue. Liability could exceed forecasted amounts or the value of the property itself. There can be no assurance that our existing reserves for specific matters will be adequate to cover our future costs.
Compliance with a broad range of complex and changing regulations could increase our costs or limit our operations, and failure to comply could result in liabilities and harm our business.
In addition to environmental regulations, our operations are subject to a wide range of other regulations and governmental requirements in the jurisdictions in which we operate, including Europe, Latin America and North America. These requirements relate to, among other areas, health and safety, labor and employment, data privacy and cybersecurity, taxation, antitrust and competition, trade and customs and other regulatory matters. Changes in these regulations, or in their interpretation or enforcement, could require us to modify certain operations and incur additional costs to maintain compliance, including costs to modify policies, processes, systems and controls, and to enhance monitoring and reporting capabilities. Regulatory authorities may also interpret applicable regulations in ways that differ from our interpretations or expectations. If our efforts to comply with existing or future regulations are deemed inadequate, we could be subject to investigations, enforcement actions, remediation obligations, fines or penalties, criminal prosecution, private litigation and restrictions on our operations.
We are subject to income, payroll, indirect and other taxes in the jurisdictions in which we operate. These regulations are complex and subject to interpretation and change, and administrative guidance may be incomplete or applied inconsistently by taxing authorities. As a result, the application of certain tax regulations to our business is uncertain, and tax authorities may challenge our interpretations, positions or methodologies.
We are regularly subject to audits, examinations, and inquiries by tax authorities in multiple jurisdictions, particularly Brazil. Although we believe our tax positions are appropriate and are reported in accordance with applicable regulations, tax authorities could reach different conclusions. Adverse outcomes from tax audits, litigation or changes in regulation or interpretation could result in additional tax liabilities, higher effective tax rates, interest, penalties or other charges, some of which could be material. We are currently involved in ongoing tax controversy matters, including a dispute in Brazil relating to the deductibility of goodwill amortization arising from a 2007 acquisition by our Brazilian subsidiary, Sylvamo do Brasil Ltda. Assessments for the tax years 2007 through 2015 total approximately $106 million in tax and $289 million in interest, penalties and fees, which increased in 2025 due to currency fluctuations. We would share liability in this matter with our former parent, International Paper, pursuant to a tax matters agreement entered into in connection with our spin-off from International Paper in 2021 (the “Tax Matters Agreement”). Although Sylvamo do Brasil Ltda. prevailed in October 2024 in Brazilian federal court proceedings covering approximately two‑thirds of the disputed amounts, the Brazilian tax authorities have appealed the favorable ruling. The remaining one-third of the assessments is also under active challenge. A ruling at the Brazilian administrative court level in November 2025 upheld this one-third of the assessments, and Sylvamo do Brasil Ltda. filed a defense against the upheld assessments in the Brazilian federal court system in January 2026. A description of this matter is set forth in Note 10 Income Taxes to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10‑K. The outcome and timing of the Brazil Tax Dispute and other tax matters are uncertain and could extend for many years.
Because we operate internationally and work with third‑party agents, distributors, suppliers and other business partners, we are exposed to the risk that our employees or third parties may violate, or be alleged to have violated, applicable anti‑corruption or sanctions regulations, even if such conduct was not authorized by us. We have implemented policies, procedures, training and internal controls designed to promote compliance with applicable
anti‑corruption and sanctions regulations. However, these measures may not prevent all violations, and we may not be able to detect improper conduct or third‑party non‑compliance in a timely manner. Violations or alleged violations could result in expensive and disruptive investigations or enforcement actions by authorities in the U.S. or other jurisdictions, require significant management time and resources, and lead to criminal or civil fines or penalties, disgorgement, sanctions, injunctions, exclusions from government contracts or other remedial measures.
Failure to protect our intellectual property or defend against infringement claims could harm our business.
If the transaction separating us from International Paper in 2021 fails to qualify for non-recognition treatment for U.S. tax purposes, it could result in significant tax liabilities.
We have ongoing potential liabilities in connection with our 2021 separation from International Paper.
We may be required to recognize impairments of goodwill or other intangible assets.
Our indebtedness could constrain our business and use of cash, and a default under our debt agreements could adversely impact our business.
Dividends and share repurchases are subject to board discretion and may be reduced or discontinued.
We may be the subject of activity by activist shareholders. Responding to shareholder activism can be costly and time-consuming, disrupt our operations and divert the attention of management and our employees from executing our
Our certificate of incorporation and bylaws contain certain provisions that may discourage, delay or prevent a change in our management or change of control, including that they, collectively: authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; provide that vacancies on our board of directors, including vacancies resulting from an enlargement of our board of directors, may be filled only by a majority vote of directors then in office; prohibit shareholder action by written consent, thereby requiring all actions to be taken at a meeting of the shareholders; and establish advance notice requirements for nominations of candidates for election as directors or to bring other business before an annual meeting of our shareholders.
Additionally, in November 2025, we adopted a shareholder rights plan, pursuant to which we issued a dividend of one preferred share purchase right (a “Right”) for each share of our common stock then outstanding. In the event of certain takeover events not authorized by our board of directors, the holders of Rights may purchase additional shares of preferred stock at a discount, diluting the ownership stake of any potential acquirer and making a takeover more expensive and difficult.
An exclusive forum provision in our Certificate of Incorporation may limit shareholders’ ability to bring claims in some forums.
