Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the aim of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps identify effective metrics for assessing momentum in stocks [1] Group 2: International Paper (IP) Performance - International Paper currently holds a Momentum Style Score of B and a Zacks Rank of 1 (Strong Buy) [2] - Over the past week, IP shares increased by 4.79%, outperforming the Zacks Paper and Related Products industry, which rose by 0.67% [3] - In the last quarter, IP shares have risen by 29.07%, and over the past year, they have gained 30.57%, compared to the S&P 500's increases of 7.34% and 19.81% respectively [4] Group 3: Trading Volume and Earnings Outlook - IP's average 20-day trading volume is 6,209,411 shares, indicating a bullish trend when combined with rising stock prices [4] - In the past two months, earnings estimates for IP have seen three upward revisions and one downward revision, raising the consensus estimate from $1.92 to $2.01 [5] - For the next fiscal year, three estimates have moved upwards with no downward revisions, indicating positive earnings momentum [5] Group 4: Conclusion - Given the strong performance metrics and positive earnings outlook, IP is positioned as a promising investment opportunity with a Momentum Score of B [6]

Financial Performance - Net earnings for Q2 2024 were $498 million ($1.41 per diluted share), a significant increase from $56 million ($0.16 per diluted share) in Q1 2024 and $235 million ($0.68 per diluted share) in Q2 2023[119]. - Adjusted operating earnings for Q2 2024 were $193 million ($0.55 per diluted share), compared to $61 million ($0.17 per diluted share) in Q1 2024 and $204 million ($0.59 per diluted share) in Q2 2023[119]. - Earnings from continuing operations for Q2 2024 totaled $498 million, or $1.41 per diluted share, compared to $56 million, or $0.16 per diluted share in Q1 2024 and $222 million, or $0.64 per diluted share in Q2 2023[150]. - Adjusted operating earnings per share for Q2 2024 were $0.55, compared to $0.59 in Q2 2023[133]. - The company reported a net special items gain of $297 million in Q2 2024, compared to a gain of $27 million in Q2 2023[155]. Sales and Volumes - Net sales for Q2 2024 were $4,734 million, a 2% increase from Q1 2024 and a 1% increase from Q2 2023[136]. - Industrial Packaging net sales for Q2 2024 were $3,931 million, a 3% increase from Q1 2024 and a 1% increase from Q2 2023, while operating profit was $291 million, 35% higher than Q1 2024[166]. - North American Industrial Packaging sales in Q2 2024 were $3,628 million, driven by higher average sales prices and seasonally higher volumes, with operating profit of $281 million[167]. - Global Cellulose Fibers net sales in Q2 2024 were $717 million, a 2% increase from Q1 2024 and a 3% increase from Q2 2023, with operating profit of $31 million[174]. - Sales volumes for corrugated packaging decreased to 2,255 thousand short tons in Q2 2024 from 2,393 thousand short tons in Q2 2023[156]. Costs and Expenses - Selling and administrative expenses increased by $95 million or 27% from Q1 2024 to Q2 2024, and by $117 million or 35% from Q2 2023[141][142]. - Cost of products sold decreased by $64 million or 2% from Q1 2024 to Q2 2024, while remaining flat compared to Q2 2023[139][140]. - Input costs in the Global Cellulose Fibers business were slightly higher due to increased chemical and wood costs, partially offset by lower energy costs[121]. - Operations and costs in the Industrial Packaging business are projected to increase due to higher reliability spending and labor costs during the summer months[123]. - Planned maintenance downtime costs are expected to be higher in Q3 2024 compared to Q2 2024, while input costs are anticipated to rise due to energy and recovered fiber[170]. Cash Flow and Investments - Free cash flow for the first six months of 2024 was $311 million, up from $265 million in the same period of 2023[135]. - The company generated cash provided by operations of $760 million in the first six months of 2024, down from $873 million in the same period of 2023[135]. - Cash provided by operations totaled $760 million for the first six months of 2024, down from $873 million in the same period of 2023, primarily due to timing of mill outage spending[178]. - Investments in capital projects totaled $449 million in the first six months of 2024, compared to $608 million in the same period of 2023, with full-year capital spending expected to be between $800 million and $1.0 billion[179]. Debt and Credit - The company recorded a net decrease in debt of $8 million in the first half of 2024, contrasting with a net increase of $236 million in the same period of 2023[179]. - At June 30, 2024, the company maintained long-term credit ratings of BBB (stable outlook) and Baa2 (stable outlook) from S&P and Moody's, respectively[183]. - As of June 30, 2024, International Paper's credit agreements totaled $1.9 billion, including a $1.4 billion bank credit agreement and up to $500 million under a receivables securitization program[184]. - The company had no outstanding borrowings under the $1.4 billion credit agreement or the $500 million receivables securitization program as of June 30, 2024[184]. - The company has a commercial paper program with a borrowing capacity of $1.0 billion, supported by its $1.4 billion credit agreement, with no outstanding borrowings as of June 30, 2024[185]. Shareholder Returns - Cash dividend payments for the first six months of 2024 totaled $321 million, maintaining a dividend of $0.9250 per share, consistent with the same period in 2023[191]. - The company utilized 2.0 million shares of treasury stock for incentive plans and repurchased common stock totaling $22 million during the first six months of 2024[189]. - The current share repurchase program has approximately $2.96 billion remaining authorized for purchase as of June 30, 2024[189]. - International Paper expects to meet projected capital expenditures, service existing debt, and make stock repurchases with current cash balances and cash from operations[188]. Strategic Initiatives - The company is implementing an 80/20 strategic approach to focus on profitable growth and improve customer reliability and innovation in packaging solutions[120]. - The company expects price and mix improvements in the Industrial Packaging business in Q3 2024, driven by prior index movements and higher export prices[123]. - Anticipated earnings for Q3 2024 are expected to be negatively impacted by maintenance outage expenses and seasonally lower sales volumes[122]. - The company expects to close the acquisition of DS Smith in Q4 2024, with the transaction structured as an all-stock deal[124]. Tax Matters - An income tax benefit of $293 million was recorded for Q2 2024, resulting in an effective income tax rate of (142)%, primarily due to a tax benefit from internal legal entity restructuring[160]. - Special items for Q2 2024 included a tax benefit of $338 million related to internal legal entity restructuring[128]. - The company has fully satisfied its tax obligations related to the settlement of a tax matter, totaling $252 million in U.S. federal income taxes and $58 million in interest expense[193]. Pension and Retirement - International Paper's pension plan is fully funded, with no anticipated cash contributions required for the next 12 months[192].

Core Viewpoint - International Paper Company (IP) reported second-quarter 2024 adjusted earnings of 55 cents per share, exceeding the Zacks Consensus Estimate by 38%, but down 7% year over year due to lower prices in key segments [1] Financial Performance - Net sales were approximately $4.7 billion, a 1% increase year over year, but below the Zacks Consensus Estimate of $4.8 billion [1] - Adjusted cost of sales was $3.3 billion, down 0.7% from the previous year, while gross profit increased 6% to $1.4 billion [2] - Adjusted selling and administrative expenses rose 26% to $424 million, leading to a total segment operating profit decrease of 4% to $322 million [2] - Adjusted EBITDA was $561 million, down from $570 million year over year, with an adjusted EBITDA margin of 11.9%, reflecting a 30-basis point contraction [2] Segment Performances - Industrial Packaging segment sales totaled $3.9 billion, up 1% year over year, with operating profit falling 4% to $291 million [3] - Global Cellulose Fibers segment sales rose 3% to $717 million, with operating profit at $31 million, marking a return to profitability after two quarters of losses [4] Cash & Debt Position - Cash and temporary investments totaled $1.05 billion at the end of Q2, down from $1.11 billion at the end of 2023 [5] - Long-term debt decreased to $5.33 billion from $5.46 billion at the end of 2023, with cash flow from operating activities at $760 million for the first half of 2024 [5] Expectations for Q3 - The company anticipates lower volumes in the Industrial Packaging segment due to seasonal factors and expects third-quarter earnings to dip from the second-quarter level [6] Update on Acquisition of DS Smith - The acquisition of DS Smith is expected to enhance IP's corrugated packaging business in Europe and is projected to provide at least $514 million in annual pre-tax cash synergies by the end of the fourth year post-acquisition [7] Stock Performance - International Paper's shares have increased by 42.9% over the past year, outperforming the industry's growth of 32.6% [8]

Second Quarter 2024 Earnings July 24, 2024 Forward-Looking Statements Certain statements in this presentation that are not historical in nature may be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forwardlooking statements can be identified by the use of forward-looking or conditional words such as "expects," "anticipates," "believes," "estimates," "could," "should," "can," "forecast," "intend," "look," "may," "will," "remain, ...

Financial Data and Key Metrics Changes - The second quarter adjusted operating earnings per share was $0.55, an increase from $0.17 in the first quarter, which included a $0.10 per share drag due to a January freeze and a fire at the Ixtac box plant [17][18] - Price and mix improved earnings by $0.23 per share, driven by prior price index movements and margin benefits from the Box Go-to-Market strategy [17] - Overall, the company experienced stable to moderately better demand, but packaging volumes lagged expectations and continued to trail the overall market [15][18] Business Line Data and Key Metrics Changes - In the industrial packaging segment, price and mix increased earnings by approximately $45 million due to prior index movements, while volume increased by $27 million sequentially [19] - The Global Cellulose Fiber segment saw a sequential price and mix increase of $22 million, but volume remained relatively flat overall [20] Market Data and Key Metrics Changes - The overall market environment showed stable to moderately better demand, but the company's packaging volumes were below expectations due to historical underinvestment in certain regions [15][18] - The company expects to trail the industry for the next few quarters as it transitions based on its new strategy [15] Company Strategy and Development Direction - The company is embracing an 80/20 operating system to focus on customer-driven strategies, optimize cost structures, and align resources towards profitable growth [13][24] - A strong emphasis is placed on improving reliability and investing in box plants and mills to enhance long-term performance and cost advantages [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the company has underperformed on key metrics over the past decade and emphasized the need for significant change [7][8] - The outlook for the third quarter indicates lower sequential earnings due to volume decline and higher costs, with expectations of a challenging near-term performance [22][30] Other Important Information - The company plans to hold an Investor Day in March to share progress and updates on its strategies [30] - A webinar on the 80/20 methodology is scheduled for August 14 to educate stakeholders on its implementation [30] Q&A Session Summary Question: Can you provide more details on the 80/20 strategy and how much of the business you intend to walk away from? - Management clarified that the focus is on segmenting the business and aligning resources rather than exiting unprofitable segments immediately [35] Question: How will the 80/20 strategy be deployed with the acquisition of DS Smith? - The integration will treat DS Smith as its own platform in Europe, with a focus on smart integration at the corporate level to avoid overburdening the new assets [39] Question: What is the expected impact of reliability spending on future performance? - Management indicated that reliability spending is crucial and should be self-funding, with expectations of improvements in the coming quarters [46][47] Question: How has the internal buy-in been for the cultural shift towards an entrepreneurial focus? - Management expressed positive surprises regarding the team's capability and willingness to embrace change, indicating strong internal support for the new direction [71] Question: What is the expected EBITDA growth and capital expenditure guidance? - The company anticipates an EBITDA potential of $4 billion for the current portfolio, with capital expenditures expected to remain between $1 billion and $1.2 billion [58][61]

Core Viewpoint - International Paper reported a revenue of $4.73 billion for the quarter ended June 2024, reflecting a year-over-year increase of 1.1% but a slight miss against the Zacks Consensus Estimate of $4.77 billion, while EPS was $0.55, down from $0.59 a year ago, but exceeded the consensus estimate of $0.40 by 37.50% [1] Group 1: Financial Performance - Net Sales for Global Cellulose Fibers reached $717 million, surpassing the average estimate of $712.46 million, with a year-over-year increase of 2.7% [2] - Net Sales for Industrial Packaging amounted to $3.93 billion, slightly below the average estimate of $3.98 billion, showing a year-over-year change of 1.2% [2] - Net Sales for Corporate and Inter-segment was reported at $86 million, falling short of the average estimate of $92 million, representing a year-over-year decline of 14% [2] - Operating Profit for Global Cellulose Fibers was $31 million, significantly higher than the average estimate of $6.41 million [2] - Operating Profit for Industrial Packaging was $291 million, exceeding the average estimate of $257.51 million [2] Group 2: Stock Performance - Over the past month, shares of International Paper have returned -1.4%, contrasting with the Zacks S&P 500 composite's increase of +1.8% [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), suggesting potential outperformance against the broader market in the near term [3]

Core Viewpoint - International Paper reported quarterly earnings of $0.55 per share, exceeding the Zacks Consensus Estimate of $0.40 per share, but down from $0.59 per share a year ago, indicating a 6.78% year-over-year decline [1] - The company achieved an earnings surprise of 37.50% for the quarter, having previously reported a surprise of -26.09% in the prior quarter [1] Financial Performance - Revenues for the quarter ended June 2024 were $4.73 billion, slightly missing the Zacks Consensus Estimate by 0.79%, and showing a year-over-year increase from $4.68 billion [1] - Over the last four quarters, International Paper has surpassed consensus EPS estimates three times but has only topped revenue estimates once [1] Stock Performance - International Paper shares have increased approximately 27% since the beginning of the year, outperforming the S&P 500's gain of 16.5% [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.63 on revenues of $4.86 billion, and for the current fiscal year, it is $2.01 on revenues of $19.14 billion [4] - The estimate revisions trend for International Paper is currently favorable, resulting in a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [4] Industry Context - The Paper and Related Products industry is currently ranked in the top 20% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [5] - Another company in the same industry, Smurfit Westrock, is expected to report quarterly earnings of $0.70 per share, reflecting a year-over-year decline of 21.4% [5]

Financial Performance - Second quarter 2024 net earnings were $498 million, translating to $1.41 per diluted share, a significant increase from $56 million ($0.16 per diluted share) in the first quarter 2024[5] - Adjusted operating earnings for the second quarter 2024 were $193 million ($0.55 per diluted share), compared to $61 million ($0.17 per diluted share) in the first quarter 2024[5] - Net sales for the second quarter 2024 reached $4.734 billion, up from $4.619 billion in the first quarter 2024[7] - Earnings from continuing operations for the three months ended June 30, 2024, were $498 million, compared to $222 million for the same period in 2023, representing a 124% increase[26] - The company reported a net earnings increase to $498 million for the three months ended June 30, 2024, up from $235 million in the same period of 2023[26] - Basic earnings per share from continuing operations increased to $1.43 for the three months ended June 30, 2024, compared to $0.64 for the same period in 2023[26] - Diluted Earnings per Share (EPS) for the three months ended June 30, 2024, was $1.41, compared to $0.68 in 2023, marking a 107% increase[29] Segment Performance - The Industrial Packaging segment generated $3.931 billion in net sales for the second quarter 2024, an increase from $3.808 billion in the first quarter 2024[10] - The Global Cellulose Fibers segment reported an operating profit of $31 million in the second quarter 2024, recovering from a loss of $47 million in the first quarter 2024[11] Cash Flow and Shareholder Returns - Cash provided by operations for the second quarter 2024 was $365 million, with free cash flow amounting to $167 million[7] - The company returned $160 million to shareholders in dividends during the second quarter 2024[5] - Free Cash Flow for the six months ended June 30, 2024, was $311 million, compared to $265 million in 2023, indicating a 17% increase[37] Tax and Special Items - A tax benefit of $338 million ($0.96 per diluted share) was recognized in the second quarter 2024 due to internal legal entity restructuring[5] - The second quarter 2024 included a net after-tax benefit of $297 million from special items, compared to a charge of $14 million in the first quarter 2024[12] - The company reported a tax benefit of $338 million for the three months ended June 30, 2024, related to internal legal entity restructuring[27] - The company reported a net special items income of $49 million for the three months ended June 30, 2024, compared to a net special items loss of $6 million in 2023[29] Costs and Liabilities - Total costs and expenses for the three months ended June 30, 2024, were $4,236 million, compared to $4,227 million for the same period in 2023[26] - The company incurred a pre-tax charge of $25 million for environmental remediation adjustments for the three months ended June 30, 2024[26] - Total Current Liabilities increased to $4,114 million as of June 30, 2024, from $3,959 million at the end of 2023, representing a 4% increase[33] Assets and Debt - Total Assets as of June 30, 2024, were $23,063 million, a slight decrease from $23,261 million as of December 31, 2023[33] - The company’s long-term debt as of June 30, 2024, was $5,329 million, down from $5,455 million at the end of 2023, reflecting a decrease of 2%[33] - The company’s retained earnings increased to $9,719 million as of June 30, 2024, compared to $9,491 million at the end of 2023, an increase of 2%[33] Business Strategy and Risks - The company is focusing on an 80/20 business process to optimize costs and enhance customer service, while also preparing for the combination with DS Smith[4] - The company is facing risks related to climate change, geopolitical conditions, and supply chain disruptions that could impact future performance[20] - The company expects to file a proxy statement regarding the proposed business combination with DS Smith Plc in late summer or early autumn 2024[21]

Core Viewpoint - International Paper Company (IP) is expected to report second-quarter 2024 results on July 24, with a consensus estimate for revenues at $4.76 billion, reflecting a 1.7% year-over-year growth, while earnings are projected at 40 cents per share, indicating a significant decline of 32.2% year-over-year [1]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for second-quarter revenues is $4.76 billion, showing a 1.7% increase from the previous year [1]. - The consensus estimate for earnings is 40 cents per share, with a notable 11% decrease in estimates over the past 60 days, reflecting a year-over-year decline of 32.2% [1][2]. Earnings Surprise History - International Paper has beaten the Zacks Consensus Estimates in three of the last four quarters, with an average surprise of 10.9% [3]. Earnings Prediction Model - The model indicates a potential earnings beat for International Paper, supported by a positive Earnings ESP of +2.53% and a Zacks Rank of 1 (Strong Buy) [5][6]. Factors Influencing Q2 Performance - Despite a decline in demand throughout most of 2023, there has been a recent uptick in demand, particularly in the e-commerce sector, which is expected to positively impact second-quarter results [7]. - Projected volumes for the Industrial Packaging segment are 4,029 thousand short tons, indicating a 2.2% year-over-year growth, while containerboard volumes are expected to reach 741 thousand short tons, reflecting a 23.5% increase [7]. Segment Performance Insights - The Industrial Packaging segment is anticipated to see a year-over-year volume increase in Saturated Kraft (7.9%) and EMEA Packaging (1.1%), but declines in Gypsum/Release Kraft (4.7%) and corrugating packaging volumes (2.8%) may offset these gains [8]. - Average realized pricing for the Industrial Packaging segment is expected to decline by 3% year-over-year, leading to a projected revenue decrease of 0.9% to $3.84 billion [8]. - The Global Cellulose Fibers segment is expected to maintain stable volumes at 729 thousand metric tons, with a 16.6% year-over-year rise, but pricing is projected to decline by 13.5% [9]. Price Performance - International Paper's shares have increased by 52.7% over the past year, outperforming the industry growth of 42.5% [10].

Group 1 - International Paper (IP) is currently outperforming its peers in the Basic Materials sector with a year-to-date performance increase of approximately 20.7% [2] - The Zacks Consensus Estimate for IP's full-year earnings has increased by 4.8% over the past quarter, indicating improved analyst sentiment [2] - The Basic Materials sector, which includes 238 stocks, has an average loss of about 1.2% year-to-date, highlighting IP's strong performance relative to the sector [2][3] Group 2 - International Paper is part of the Paper and Related Products industry, which consists of 12 stocks and currently ranks 70 in the Zacks Industry Rank [3] - The Paper and Related Products industry has experienced a loss of about 11.7% year-to-date, further emphasizing IP's superior performance within its industry [3] - Eldorado Gold Corporation, another outperforming stock in the Basic Materials sector, has increased by 27.6% year-to-date and belongs to the Mining - Gold industry, which is ranked 57 [2][3]