Financial Data and Key Metrics Changes - The second quarter adjusted operating earnings per share was $0.20, down from $0.23 in the first quarter, with price and mix increasing by $0.21 per share due to strong price realization in Packaging Solutions North America [27][28] - Free cash flow for the second quarter was $54 million, with expectations for the full year ranging from $100 million to $300 million [25][26] - The company is holding its 2025 EBITDA guidance, targeting $600 million, and aims for $1.1 billion by 2027 [6][20] Business Line Data and Key Metrics Changes - In Packaging Solutions North America, on-time delivery improved from 92% in Q4 of the previous year to 97% in Q2 [15] - Volume in Packaging Solutions North America was seasonally higher, while EMEA experienced lower volume due to macroeconomic uncertainty [23][36] - The company announced the closure of four facilities and the sale of three facilities in North America to reduce complexity and minimize costs [17] Market Data and Key Metrics Changes - Industry demand in North America has been stable but softer than last year, with expectations for stable box demand in Q3 and potential upside in Q4 [11][12] - EMEA box shipments slowed by approximately 1% in Q2, primarily due to market softness, although June showed signs of recovery [13] - The company anticipates a moderate increase in demand in EMEA in the second half of the year, driven by seasonal growth in fast-moving consumer goods [14] Company Strategy and Development Direction - The company is focused on a transformational journey aiming for $6 billion in EBITDA by 2027, with a strategy centered around the "eightytwenty" initiative to drive operational excellence [6][8] - The company is committed to a relentless pursuit of commercial excellence and cost reduction to build a stronger organization [21][22] - The strategic review of the global Southern Fibers business is ongoing, with no changes to the expected timeline [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in closing the market share gap in North America despite soft market conditions in the U.S. and EMEA [6][12] - The management acknowledged ongoing mill reliability issues, attributing them to years of underinvestment, and emphasized the need for consistent capital reinvestment [50][94] - The outlook for EMEA remains cautious due to macroeconomic volatility, but management believes the trough was reached in early Q2 [67] Other Important Information - The company has proposed to close five UK plants, which is expected to yield approximately $25 million in savings [20] - The company is nearing its goal of a $600 million run rate in cost-out actions by year-end [20] Q&A Session Summary Question: Concerns about mill reliability issues - Management acknowledged that mill reliability issues have been building for years due to underinvestment and emphasized the need for consistent capital reinvestment into strategic assets [50][52] Question: Outlook for North America and EMEA - Management expressed confidence in North America due to improved commercial actions and the implementation of the eightytwenty initiative, while EMEA's outlook remains subject to market conditions [60][67] Question: July box volumes and customer inventories - Management indicated that the market is relatively flat, with no evidence of significant restocking among customers, and highlighted the cautious approach of customers regarding net investment spending [76][80] Question: Opportunities for accelerating reinvestment in mills - Management stated that while there is a focus on mill reliability, the ability to accelerate reinvestment is constrained by the need to avoid funding non-strategic assets [94][96] Question: Update on exiting non-strategic export markets - Management reported progress in exiting non-strategic export markets, indicating they are about halfway through the process [100][102]

Financial Performance - Sales for Q2 2025 reached $6767 million, compared to $5901 million in Q1 2025 and $4734 million in Q2 2024[27] - Adjusted EBITDA for Q2 2025 was $733 million, down from $769 million in Q1 2025 but up from $561 million in Q2 2024[27] - Adjusted Operating EPS decreased from $023 in Q1 2025 to $020 in Q2 2025[27] - Free Cash Flow improved significantly from $(618) million in Q1 2025 to $54 million in Q2 2025[27] Packaging Solutions North America (PS NA) - PS NA Sales increased to $3860 million in Q2 2025 from $3702 million in Q1 2025 and $3628 million in Q2 2024[34] - PS NA Adjusted EBITDA was $515 million in Q2 2025, compared to $554 million in Q1 2025 and $465 million in Q2 2024[35] - IP U S Box shipments decreased by 50% YoY/day[37] Packaging Solutions EMEA (PS EMEA) - PS EMEA Sales significantly increased to $2291 million in Q2 2025, including DS Smith results, compared to $1550 million in Q1 2025 and $328 million in Q2 2024[40] - PS EMEA Adjusted EBIT was $(1) million in Q2 2025, down from $46 million in Q1 2025 and $10 million in Q2 2024[40] - PS EMEA Adjusted EBITDA was $194 million in Q2 2025, up from $153 million in Q1 2025 and $26 million in Q2 2024[40] Global Cellulose Fibers (GCF) - GCF Sales decreased to $628 million in Q2 2025 from $643 million in Q1 2025 and $717 million in Q2 2024[45] - GCF Adjusted EBITDA decreased to $45 million in Q2 2025 from $68 million in Q1 2025 and $90 million in Q2 2024[46] - GCF Adjusted EBITDA Margin decreased to 72% in Q2 2025 from 106% in Q1 2025 and 126% in Q2 2024[47] Strategic Initiatives - Commercial Excellence actions are expected to yield ~$650 million YTD, targeting $11 billion by 2027[16] - Cost Out actions are expected to yield ~$550 million YTD, targeting $19 billion by 2027[20]

Core Viewpoint - International Paper reported quarterly earnings of $0.20 per share, missing the Zacks Consensus Estimate of $0.38 per share, and down from $0.55 per share a year ago, indicating a significant earnings surprise of -47.37% [1] - The company posted revenues of $6.77 billion for the quarter, slightly missing the Zacks Consensus Estimate by 0.04%, and showing an increase from $4.73 billion year-over-year [2] Financial Performance - Over the last four quarters, International Paper has surpassed consensus EPS estimates two times and topped revenue estimates only once [2] - The company's shares have decreased by approximately 0.4% since the beginning of the year, contrasting with the S&P 500's gain of 8.2% [3] Future Outlook - The future performance of International Paper's stock will largely depend on management's commentary during the earnings call and the revisions of earnings estimates [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.67 on revenues of $6.92 billion, and for the current fiscal year, it is $2.01 on revenues of $26.53 billion [7] Industry Context - The Paper and Related Products industry, to which International Paper belongs, is currently ranked in the bottom 16% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of International Paper's stock may also be influenced by the overall outlook for the industry [8]

[Financial Highlights & Outlook](index=1&type=section&id=Financial%20Highlights%20%26%20Outlook) International Paper reported Q2 2025 net earnings of $75 million ($0.14/share) and adjusted operating earnings of $105 million ($0.20/share) on net sales of $6.8 billion, with stronger Q3 global revenue and earnings anticipated Q2 2025 Key Financial Results | Metric | Value | | :--- | :--- | | Net Sales | $6.8 billion | | Net Earnings | $75 million | | Net EPS (Diluted) | $0.14 | | Adjusted Operating Earnings (Non-GAAP) | $105 million | | Adjusted Operating EPS (Non-GAAP) | $0.20 | - CEO Andy Silvernail highlighted that Q2 results reflect a full quarter with the combined DS Smith business, with commercial efforts driving revenue and seasonally higher volumes in North America, though margins were impacted by cost headwinds and maintenance outages[3](index=3&type=chunk) - The company expects stronger global revenue and earnings in Q3 2025, citing confirmed strategic wins, progress on cost-out initiatives, and fewer planned maintenance outages[3](index=3&type=chunk) EPS Comparison (Q2 2025 vs. Q1 2025 vs. Q2 2024) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Earnings (Loss) Per Share | $0.14 | $(0.24) | $1.41 | | Adjusted Operating Earnings Per Share | $0.20 | $0.23 | $0.55 | Select Financial Measures Comparison (in millions) | Metric | Q2 2025 (in millions) | Q1 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | :--- | | Net Sales | $6,767 | $5,901 | $4,734 | | Net Earnings (Loss) | $75 | $(105) | $498 | | Adjusted Operating Earnings | $105 | $101 | $193 | | Free Cash Flow | $54 | $(618) | $167 | [Segment Performance](index=2&type=section&id=SEGMENT%20INFORMATION) Post-DS Smith acquisition, new segments Packaging Solutions North America, EMEA, and Global Cellulose Fibers show North America's operating profit nearly doubled to $277 million, while EMEA and Global Cellulose Fibers reported losses due to demand and cost pressures - The company has reorganized its reporting segments following the DS Smith acquisition, effective January 31, 2025, with new segments including Packaging Solutions North America, Packaging Solutions EMEA, and Global Cellulose Fibers[8](index=8&type=chunk) Business Segment Operating Profit (Loss) (in millions) | Segment | Q2 2025 (in millions) | Q1 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | :--- | | Packaging Solutions North America | $277 | $142 | $281 | | Packaging Solutions EMEA | $(1) | $46 | $10 | | Global Cellulose Fibers | $(4) | $17 | $31 | [Packaging Solutions North America (PS NA)](index=2&type=section&id=Packaging%20Solutions%20North%20America) PS NA operating profit increased to $277 million in Q2 2025 from $142 million in Q1 2025, driven by higher sales prices and volumes, partially offset by increased manufacturing costs and overhead expenses - PS NA operating profit was **$277 million** in Q2 2025, a significant increase from **$142 million** in Q1 2025[11](index=11&type=chunk) - Performance was driven by higher sales prices for boxes and containerboard and seasonally higher box volumes[11](index=11&type=chunk) - Depreciation was lower due to the non-repeat of a **$193 million** accelerated depreciation charge from Q1 related to a mill closure[13](index=13&type=chunk) [Packaging Solutions EMEA (PS EMEA)](index=3&type=section&id=Packaging%20Solutions%20EMEA) The PS EMEA segment reported an operating loss of $(1) million in Q2 2025, a sharp decline from a $46 million profit, despite increased net sales to $1.9 billion due to the DS Smith acquisition, impacted by soft demand, higher energy costs, and increased depreciation and amortization - PS EMEA reported an operating loss of **$(1) million** in Q2 2025 compared to a **$46 million** profit in Q1 2025[14](index=14&type=chunk) - Net sales increased to **$1.9 billion** from **$1.2 billion** in Q1, reflecting three months of DS Smith results versus two months in the prior quarter[14](index=14&type=chunk) - Profitability was negatively impacted by a soft demand environment, higher energy and maintenance costs, and a significant increase in depreciation and amortization from the DS Smith acquisition accounting[14](index=14&type=chunk) [Global Cellulose Fibers](index=3&type=section&id=Global%20Cellulose%20Fibers) The Global Cellulose Fibers segment posted an operating loss of $(4) million in Q2 2025, down from a $17 million profit, primarily due to lower sales volumes offsetting higher prices, and increased planned outage and operating costs - Global Cellulose Fibers reported an operating loss of **$(4) million** in Q2 2025, compared to a **$17 million** profit in Q1 2025[15](index=15&type=chunk) - Net sales were lower as higher average sales prices were more than offset by lower volumes[15](index=15&type=chunk) - Costs were higher due to planned outages and increased operating expenses[15](index=15&type=chunk) [Effects of Net Special Items](index=3&type=section&id=EFFECTS%20OF%20NET%20SPECIAL%20ITEMS) The company recorded a net after-tax charge from special items of $34 million ($0.06 per share) in Q2 2025, significantly lower than Q1 2025, including DS Smith combination costs, severance, and a gain on European box plant sales Net Special Items Summary (After Tax, in millions) | Item | Q2 2025 (in millions) | Q1 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | :--- | | DS Smith combination costs | $29 | $183 | $17 | | Severance and other costs | $34 | $63 | — | | Net (gain) on sale of business | $(40) | — | — | | **Total special items, net** | **$34** | **$204** | **$(297)** | - A gain of **$51 million** (pre-tax) was recognized from the sale of five European box plants to satisfy regulatory commitments for the DS Smith combination[17](index=17&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) Unaudited financial statements reflect significant changes due to the DS Smith acquisition, with a net loss of $30 million on $12.7 billion net sales for H1 2025, substantial balance sheet expansion, and decreased cash from operations [Consolidated Statement of Operations](index=7&type=section&id=Consolidated%20Statement%20of%20Operations) For Q2 2025, International Paper reported Net Sales of $6.8 billion and Net Earnings of $75 million, compared to Q2 2024's $4.7 billion sales and $498 million earnings, with 2025 results impacted by DS Smith combination costs Consolidated Statement of Operations Highlights (in millions) | Line Item | Q2 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | | Net Sales | $6,767 | $4,734 | | Cost of products sold | $4,876 | $3,360 | | Earnings Before Income Taxes | $116 | $206 | | Net Earnings (Loss) | $75 | $498 | [Consolidated Balance Sheet](index=10&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2025, the balance sheet expanded significantly due to the DS Smith acquisition, with Total Assets growing to $42.4 billion from $22.8 billion, driven by increases in Goodwill, Intangibles, and PP&E, and Long-Term Debt rising to $9.7 billion Balance Sheet Comparison (in millions) | Metric | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $9,499 | $6,424 | | Goodwill | $7,531 | $3,038 | | Intangibles, Net | $4,406 | $145 | | **Total Assets** | **$42,376** | **$22,800** | | Long-Term Debt | $9,694 | $5,368 | | **Total Equity** | **$18,617** | **$8,173** | [Consolidated Statement of Cash Flows](index=11&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) For H1 2025, cash provided by operating activities was $188 million, down from $760 million in H1 2024, with investing activities using $38 million and financing activities using $253 million, primarily for dividends Six-Month Cash Flow Summary (in millions) | Activity | H1 2025 (in millions) | H1 2024 (in millions) | | :--- | :--- | :--- | | Cash Provided By Operating Activities | $188 | $760 | | Cash Provided By (Used For) Investment Activities | $(38) | $(446) | | Cash Provided By (Used for) Financing Activities | $(253) | $(365) | | **Change in Cash** | **$(35)** | **$(64)** | [Non-GAAP Reconciliations](index=9&type=section&id=Non-GAAP%20Reconciliations) The company provides reconciliations for non-GAAP measures like Adjusted Operating Earnings and Free Cash Flow to their GAAP equivalents, aiding investors in assessing operational performance - Management uses non-GAAP measures like Adjusted Operating Earnings and Free Cash Flow to focus on ongoing operations and believes they are useful for investors in assessing performance and comparing results[29](index=29&type=chunk)[37](index=37&type=chunk) [Reconciliation of Net Earnings to Adjusted Operating Earnings](index=9&type=section&id=Reconciliation%20of%20Net%20Earnings%20to%20Adjusted%20Operating%20Earnings) For Q2 2025, GAAP Net Earnings of $75 million are reconciled to non-GAAP Adjusted Operating Earnings of $105 million by adding back net special items and accounting for non-operating pension income Q2 2025 Reconciliation of Net Earnings to Adjusted Operating Earnings (in millions) | Line Item | Q2 2025 (in millions) | | :--- | :--- | | Net Earnings (Loss) | $75 | | Add back: Non-operating pension expense (income) | $(5) | | Add back: Net special items expense (income) | $35 | | Income taxes - Non-operating pension and special items | $— | | **Adjusted Operating Earnings** | **$105** | [Reconciliation of Cash Provided by Operations to Free Cash Flow](index=12&type=section&id=Reconciliation%20of%20Cash%20Provided%20by%20Operations%20to%20Free%20Cash%20Flow) In Q2 2025, cash from operating activities of $476 million, after subtracting $422 million for capital expenditures, resulted in Free Cash Flow of $54 million, a decrease from Q2 2024 Free Cash Flow Reconciliation (in millions) | Line Item | Q2 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | | Cash Provided By (Used For) Operating Activities | $476 | $365 | | Capital expenditures | $(422) | $(198) | | **Free Cash Flow** | **$54** | **$167** |

MEMPHIS, Tenn., July 31, 2025 /PRNewswire/ -- International Paper (NYSE: IP; LSE: IPC) (the "Company") today reported second quarter 2025 net earnings (loss) of $75 million, or $0.14 per diluted share, and adjusted operating earnings (non-GAAP) of $105 million, or $0.20 per diluted share. Second quarter 2025 net sales were $6.8 billion. | | Second | First | Second | | | --- | --- | --- | --- | --- | | (In millions) | Quarter | Quarter | Quarter | | | | 2025 | 2025 | 2024 | | | Net Sales | $ | 6,767 $ | 5,90 ...

Core Insights - The upcoming earnings report for International Paper (IP) is anticipated to show quarterly earnings of $0.38 per share, reflecting a 30.9% decline year-over-year, while revenues are forecasted to reach $6.77 billion, indicating a 43% increase compared to the previous year [1] - Analysts have revised the consensus EPS estimate down by 1.5% over the last 30 days, suggesting a reevaluation of initial projections [1][2] Financial Metrics - The consensus estimate for 'Net Sales- Global Cellulose Fibers' is projected at $650.42 million, representing a 9.3% decrease from the prior-year quarter [3] - 'Net Sales- Corporate and Inter-segment' is expected to be $63.94 million, indicating a 25.7% decline from the previous year [4] - Analysts predict a 'Segment Operating Profit (Loss)- Global Cellulose Fibers' of -$3.83 million, contrasting sharply with the year-ago figure of $31.00 million [4] Stock Performance - International Paper shares have increased by 18.5% over the past month, outperforming the Zacks S&P 500 composite, which rose by 3.6% [4] - The company holds a Zacks Rank of 3 (Hold), suggesting it is expected to closely follow overall market performance in the near term [4]

Core Insights - International Paper Company (IP) is set to report its second-quarter 2025 results on July 31, with expected revenues of $6.8 billion, reflecting a 43% year-over-year growth [1][6] - The earnings estimate for IP has decreased by 2.6% over the past 60 days to 38 cents per share, indicating a 30% decline compared to the previous year [1][6] Revenue and Earnings Expectations - The projected revenue of $6.8 billion for Q2 is primarily driven by the acquisition of DS Smith [6] - The Packaging Solutions EMEA segment is expected to see net sales rise to $2.23 billion from $330 million year-over-year, with an anticipated operating profit of $72.9 million [6][9] - Packaging Solutions North America is projected to have net sales of $4.01 billion, a 10.4% increase year-over-year, with an operating profit of $309 million [10] - The Global Cellulose Fibers segment is expected to report a 9.1% decline in net sales to $652 million, with an operating loss of $4.1 million [10] Market Dynamics - The company has been facing weak packaging demand due to inflationary pressures affecting consumer priorities, leading to reduced demand for packaging [11] - However, stable demand in the e-commerce sector and strategic initiatives by the company may help mitigate some of these challenges [11] Earnings Surprise History - International Paper has beaten the Zacks Consensus Estimates in three of the last four quarters, with an average surprise of 39.5% [3][4] - The current Earnings ESP for IP stands at +1.31%, indicating a potential for an earnings beat [7] Stock Performance - Over the past year, IP shares have increased by 23.7%, compared to the industry's growth of 30.6% [12] Strategic Acquisition - The completion of the DS Smith acquisition on January 31, 2025, has positioned International Paper as a global leader in sustainable packaging solutions, impacting its financial reporting structure [8]

Group 1 - The company has recently made key announcements prompting a reassessment of its coverage [1] - The previous analysis resulted in a downgrade of the company's rating to neutral, indicating a balanced risk/reward profile [1] - The share price outlook remains uncertain in the short term [1] Group 2 - No current stock or derivative positions are held by the analysts regarding the company [2] - The article reflects the author's personal opinions without any compensation from the company mentioned [2] - There is no business relationship between the author and the company discussed [2]

Core Insights - International Paper is making strategic changes to strengthen its North American operations and enhance customer service [1][2] - The company plans to exit the molded fiber business and close several facilities, including a packaging facility in Marion, Ohio, and a recycling facility in Wichita, Kansas [1][6] - International Paper aims to streamline operations to focus on sustainable packaging solutions and improve quality, reliability, and service delivery [2] Company Overview - International Paper is a global leader in sustainable packaging solutions, headquartered in Memphis, Tennessee, with operations in over 30 countries [3] - The company employs more than 65,000 team members and reported net sales of $18.6 billion for 2024 [3] - In 2025, International Paper acquired DS Smith, enhancing its position in the North American and EMEA regions [3] Employee Impact - The changes will affect approximately 110 hourly and 24 salaried employees in the U.S., while the current onsite team members in Mexico will be retained [1][2] - The company is committed to minimizing the impact on affected employees through job placement, retirements, and severance support [1][2] Facility Changes - The Reno, Nevada facility will be converted to support the packaging business, while the containerboard mill and recycling plants in Mexico will be sold to APSA [1][6] - These actions are part of a broader initiative to rationalize the company's portfolio and focus on growth in sustainable packaging [2]

Group 1 - International Paper will release its second-quarter earnings on July 31, 2025, before the opening of the New York Stock Exchange [1] - A webcast to discuss earnings and current market conditions will begin at 10 a.m. ET [1] - Participants can join the webcast via teleconference or listen online, with a replay available for ninety days [2] Group 2 - International Paper is a global leader in sustainable packaging solutions, headquartered in Memphis, Tennessee, with operations in over 30 countries [3] - The company employed more than 65,000 team members and reported net sales of $18.6 billion for 2024 [3] - In 2025, International Paper acquired DS Smith, enhancing its position in the North American and EMEA regions [3]