Third Quarter 2024 Earnings October 31, 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," "remai ...

分组1 - International Paper reported quarterly earnings of $0.44 per share, exceeding the Zacks Consensus Estimate of $0.24 per share, but down from $0.64 per share a year ago, representing an earnings surprise of 83.33% [1] - The company posted revenues of $4.69 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.37% and up from $4.61 billion year-over-year [2] - International Paper has outperformed the S&P 500 with a stock increase of about 35.6% since the beginning of the year compared to the S&P 500's gain of 21.9% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $0.41 on revenues of $4.76 billion, and for the current fiscal year, it is $1.54 on revenues of $18.83 billion [7] - The Zacks Industry Rank indicates that the Paper and Related Products industry is currently in the bottom 26% of over 250 Zacks industries, suggesting potential challenges for stocks in this sector [8]

Financial Performance - Third quarter 2024 net earnings were $150 million, or $0.42 per diluted share, compared to $165 million, or $0.47 per diluted share in the same quarter of 2023[2]. - Adjusted operating earnings for the third quarter 2024 were $153 million, or $0.44 per diluted share, down from $224 million, or $0.64 per diluted share in the third quarter of 2023[2][3]. - Earnings from continuing operations for the three months ended September 30, 2024, were $150 million, compared to $165 million in the same period of 2023, reflecting a decrease of 9.1%[17]. - Net earnings from continuing operations for the three months ended September 30, 2024, were $150 million, compared to $192 million for the same period in 2023, representing a decrease of 21.9%[20]. - Diluted earnings per share from continuing operations for the three months ended September 30, 2024, were $0.42, compared to $0.55 for the same period in 2023, a decrease of 23.6%[21]. - Adjusted operating earnings for the nine months ended September 30, 2024, were $407 million, down from $613 million for the same period in 2023, reflecting a decline of 33.6%[20]. Cash Flow and Operations - Cash provided by operations in the third quarter 2024 was $521 million, an increase from $468 million in the third quarter of 2023[5]. - Free cash flow for the third quarter 2024 was $309 million, compared to $240 million in the same quarter of 2023[5]. - Free cash flow for the nine months ended September 30, 2024, was $620 million, compared to $505 million for the same period in 2023, an increase of 22.8%[28]. - Cash provided by operating activities for the nine months ended September 30, 2024, was $1,281 million, down from $1,341 million for the same period in 2023, a decrease of 4.5%[27]. Sales and Revenue - Net sales for the third quarter 2024 were $4.686 billion, slightly up from $4.613 billion in the third quarter of 2023[5][7]. - The Industrial Packaging segment reported net sales of $3.926 billion in the third quarter 2024, compared to $3.787 billion in the same quarter of 2023[7]. - Net sales for the three months ended September 30, 2024, were $4,686 million, a 1.6% increase from $4,613 million in the same period of 2023[17]. Costs and Expenses - Total costs of products sold for the three months ended September 30, 2024, were $3,342 million, slightly down from $3,345 million in the same period of 2023[17]. - The company incurred $56 million in restructuring and other charges for the three months ended September 30, 2024, related to its strategic initiatives[17]. - The company reported a net special items expense of $181 million for the nine months ended September 30, 2024, compared to $26 million for the same period in 2023, indicating increased costs[20]. - Net special items in the third quarter 2024 resulted in a net after-tax charge of $12 million, compared to a benefit of $297 million in the second quarter of 2024[9]. Assets and Liabilities - Total current assets increased to $6,643 million as of September 30, 2024, from $6,608 million at December 31, 2023, a rise of 0.5%[25]. - Total liabilities decreased to $14,532 million as of September 30, 2024, from $14,906 million at December 31, 2023, a reduction of 2.5%[25]. - The company’s cash and temporary investments increased to $1,159 million as of September 30, 2024, from $1,113 million at December 31, 2023, an increase of 4.1%[25]. - The company’s retained earnings rose to $9,705 million as of September 30, 2024, compared to $9,491 million at December 31, 2023, an increase of 2.3%[25]. Strategic Initiatives - The company plans to close the transaction with DS Smith in early Q1 2025, which is expected to unlock substantial value[2]. - The company is focusing on an 80/20 approach to align resources and reduce complexity and costs, including organizational restructuring and corporate cost reductions[2]. - The company is pursuing a proposed business combination with DS Smith Plc, which may impact future financial performance and operational integration[17]. Risks and Considerations - The company faced various risks including climate change, geopolitical conditions, and supply chain disruptions that could affect future performance[17]. Non-GAAP Financial Measures - Management emphasizes the importance of non-GAAP financial measures for understanding financial results and trends[30]. - Non-GAAP measures are utilized in financial, operational, and planning decisions[30]. - Investors are advised to be cautious about relying solely on non-GAAP financial measures[30].

Core Insights - International Paper reported third quarter 2024 net earnings of $150 million, or $0.42 per diluted share, with adjusted operating earnings of $153 million, or $0.44 per diluted share, reflecting a decrease from the previous quarter and year [1][2][3] - The company generated $521 million in cash from operations and returned $161 million to shareholders in dividends, indicating strong operational cash flow despite lower earnings [1][3] - The CEO emphasized a focus on profitable growth and strategic resource alignment, including organizational restructuring and cost reductions, while exploring options for the Global Cellulose Fibers business [1][4] Financial Performance - Net sales for the third quarter 2024 were $4.686 billion, slightly down from $4.734 billion in the second quarter 2024 but up from $4.613 billion in the third quarter 2023 [3][4] - Adjusted operating earnings decreased to $153 million from $193 million in the second quarter 2024 and $224 million in the third quarter 2023 [2][3] - Free cash flow for the third quarter was $309 million, an increase from $240 million in the same quarter last year [3][16] Segment Performance - The Industrial Packaging segment reported net sales of $3.926 billion, with operating profit of $197 million, down from $291 million in the previous quarter [5][6] - The Global Cellulose Fibers segment saw an operating profit of $40 million, an improvement from $31 million in the second quarter 2024, driven by higher sales prices [6][7] - Corporate and inter-segment sales were $50 million, down from $86 million in the second quarter 2024 [5] Special Items and Adjustments - Net special items for the third quarter amounted to a net after-tax charge of $12 million, compared to a benefit of $297 million in the second quarter 2024 [7][11] - Restructuring charges included $56 million in severance costs related to the company's strategic realignment [7][11] - Adjusted operating earnings per share were $0.44, down from $0.55 in the second quarter 2024 and $0.64 in the third quarter 2023 [2][11] Future Outlook - The company anticipates closing the transaction with DS Smith in early 2025, which is expected to unlock substantial value [1][4] - Management is committed to reducing complexity and costs while enhancing competitive and strategic assets [1][4] - The focus remains on delivering sustainable packaging solutions and improving profitability amid challenging market conditions [1][4]

Core Viewpoint - International Paper Company (IP) is expected to report third-quarter 2024 results on October 31, with projected revenues of $4.67 billion, reflecting a 1.2% year-over-year growth, while earnings per share are estimated at 24 cents, indicating a significant decline of 62.5% from the previous year [1]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for IP's third-quarter revenues is $4.67 billion, showing a 1.2% increase from the prior year [1]. - The earnings estimate for the third quarter is 24 cents per share, which represents a 62.5% decline year-over-year [1]. Earnings Surprise History - International Paper has beaten the Zacks Consensus Estimates in three of the last four quarters, with an average surprise of 10.1% [3]. Earnings Prediction Model - The model predicts an earnings beat for International Paper this season, supported by a positive Earnings ESP of +6.25% and a Zacks Rank of 2 (Buy) [5][6]. Segment Performance Insights - The Industrial Packaging segment is expected to see a year-over-year volume improvement in Saturated Kraft (9%) and Gypsum/Release Kraft (1.2%), but a decline in corrugating packaging volumes (5.1%) may offset these gains [7]. - Overall volumes for the Industrial Packaging segment are projected at 3,926 thousand short tons, indicating a 0.5% year-over-year dip, while containerboard volumes are expected to grow by 14.8% to 777 thousand short tons [8]. - Average realized pricing for the Industrial Packaging segment is anticipated to be 1% higher year-over-year, with revenues expected to improve by 0.8% to $3.82 billion, despite a projected 59.7% drop in quarterly operating profit to $131 million due to rising input costs [9]. - The Global Cellulose Fibers segment is projected to have volumes of 679 thousand metric tons, reflecting a 1.8% year-over-year decline, with revenues estimated at $714 million, a 1.4% decrease from the previous year [10]. Share Price Performance - International Paper's shares have increased by 52.5% over the past year, outperforming the industry growth of 50.6% [11].

Core Viewpoint - The market anticipates a year-over-year decline in International Paper's earnings despite an increase in revenues, with the actual results being crucial for stock price movement [1] Earnings Expectations - International Paper is expected to report quarterly earnings of $0.23 per share, reflecting a year-over-year decrease of 64.1% [2] - Revenues are projected to be $4.67 billion, which is a 1.2% increase from the same quarter last year [2] Estimate Revisions - The consensus EPS estimate has been revised down by 5.36% over the last 30 days, indicating a reassessment by analysts [3] Earnings Surprise Prediction - The Zacks Earnings ESP model shows a positive Earnings ESP of +16.13% for International Paper, suggesting analysts have recently become more optimistic about the company's earnings [4][6] - The stock currently holds a Zacks Rank of 3, indicating a neutral outlook [6] Historical Performance - In the last reported quarter, International Paper exceeded the expected earnings of $0.40 per share by delivering $0.55, resulting in a surprise of +37.50% [7] - Over the past four quarters, the company has beaten consensus EPS estimates three times [7] Industry Comparison - Smurfit Westrock, another player in the paper industry, is expected to report earnings of $0.71 per share, down 12.4% year-over-year, with revenues projected at $8.04 billion, up 61.1% [9] - Smurfit Westrock's consensus EPS estimate has been revised up by 9.3% in the last 30 days, but it has a Zacks Rank of 4, making it difficult to predict an earnings beat [9]

Group 1 - International Paper will release its third-quarter 2024 earnings on October 31, 2024, 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] - Interested parties can access the webcast via the company's website and a replay will be available approximately two hours after the call [1] Group 2 - Participants can join the webcast via teleconference by dialing specific numbers, with a conference ID number provided [2] - An audio-only replay of the call will be available for ninety days following the event [2] Group 3 - International Paper is a global producer of sustainable packaging, pulp, and other fiber-based products, and is one of the world's largest recyclers [3] - The company is headquartered in Memphis, Tennessee, and employs approximately 39,000 colleagues globally [3] - Net sales for 2023 were reported at $18.9 billion [3]

Group 1: Acquisition Details - International Paper (IP) has announced the acquisition of DS Smith Plc, valued at £5.8 billion ($7.4 billion) on a fully diluted basis, with an enterprise value of £7.8 billion ($9.9 billion) [2] - Approximately 99% of International Paper's shareholders voted in favor of the acquisition, while DS Smith's shareholders had approved the deal earlier [1][2] - The acquisition is expected to close in the latter part of the fourth quarter of 2024, subject to regulatory clearances and customary closing conditions [2] Group 2: Financial Impact - The acquisition is projected to be accretive to International Paper's earnings in the first year post-closure, providing at least $514 million of pre-tax cash synergies annually by the end of the fourth year [1][2] Group 3: Strategic Benefits - The merger will create a global leader in sustainable packaging solutions, enhancing International Paper's corrugated packaging business in Europe and improving customer offerings [3] - The integration of both companies' mill and box networks will optimize supply chains in Europe and the United States, leveraging the expertise of both management teams for enhanced innovation and sustainability [3] Group 4: Industry Context - The merger of International Paper and DS Smith follows another significant industry merger between WestRock Company and Smurfit Kappa Group Plc, forming Smurfit Westrock Plc, a leader in sustainable paper and packaging [4] - International Paper's shares have increased by 37.7% over the past year, outperforming the industry's growth of 30% [5]

Core Viewpoint - International Paper has received shareholder approval for its acquisition of DS Smith, which is expected to create a global leader in sustainable packaging solutions [1][2]. Company Overview - International Paper is a global provider of renewable fiber-based packaging and pulp products, employing approximately 39,000 people worldwide [3]. - The company reported net sales of $18.9 billion for the year 2023 [3]. Acquisition Details - Both International Paper and DS Smith shareholders have overwhelmingly approved the acquisition, indicating strong support for the Combination [2]. - The Combination is anticipated to close in late Q4 2024, pending regulatory clearance and customary closing conditions [1].

Group 1: Acquisition Details - International Paper (IP) has submitted a definitive proxy statement to the U.S. Securities and Exchange Commission regarding its acquisition of DS Smith Plc (DITHF), which aims to enhance its corrugated packaging business in Europe and focus on sustainable packaging [1] - The acquisition is projected to be accretive to International Paper's earnings in the first year and is expected to generate at least $514 million in pre-tax cash synergies annually by the end of the fourth year post-closure [1] - The total value of the acquisition is £5.8 billion ($7.4 billion) on a fully diluted basis, with an enterprise value of £7.8 billion ($9.9 billion) [4] Group 2: Shareholder Meetings and Approvals - International Paper's shareholders will vote on the issuance of new shares at a special meeting on October 11, 2024, to approve the IP-DITHF combination [2] - DS Smith has scheduled its shareholder meeting for October 7, 2024, to seek approval for the combination [3] Group 3: Strategic Benefits - The merger will create a global leader in sustainable packaging solutions, significantly strengthening the corrugated packaging business in Europe and enhancing customer offerings [4] - The integration of both companies' mill and box networks will optimize supply chains in Europe and the U.S., driving significant synergies through improved integration and economies of scale [5] Group 4: Industry Context - The merger between International Paper and DS Smith follows another significant merger in the industry, the combination of WestRock Company and Smurfit Kappa Group Plc, which formed Smurfit Westrock Plc [6] - International Paper's shares have outperformed the industry, gaining 41.8% over the past year compared to the industry's growth of 22.1% [8]