Company Leadership Changes - Tom Plath, Senior Vice President of Human Resources and Corporate Affairs at International Paper, will leave the company at the end of the year after a 33-year career [1] - Plath has held various roles in HR, operations, marketing, and general management, becoming an officer in 2013 and SVP in 2017 [1] - His responsibilities will be reassigned immediately, and he will serve in an advisory capacity until the end of the year to ensure a smooth transition [1] Company Overview - International Paper is a global producer of sustainable packaging, pulp, and other fiber-based products, and is one of the world's largest recyclers [2] - The company is headquartered in Memphis, Tennessee, and employs approximately 39,000 colleagues globally [2] - Net sales for 2023 were reported at $18.9 billion [2]

Company Overview - International Paper is a global producer of sustainable packaging, pulp, and other fiber-based products, and is one of the world's largest recyclers [2] - The company is headquartered in Memphis, Tennessee, and employs approximately 39,000 colleagues globally [2] - In 2023, International Paper reported net sales of $18.9 billion [2] Upcoming Events - CEO Andy Silvernail will present at the Jefferies 2024 Industrials Conference on September 4, 2024, starting at 8:05 a.m. eastern time [1] - The presentation will be followed by a question and answer session, and interested parties can listen to the webcast via the company's website [1] - A replay of the webcast will be available approximately three hours after the presentation [1]

Core Viewpoint - International Paper (IP) is experiencing solid improvement in earnings estimates, which is likely to positively impact its stock price [1][5]. Earnings Estimates - Analysts have shown strong agreement in raising earnings estimates for International Paper, leading to a significant increase in consensus estimates for the next quarter and the full year [2]. - For the current quarter, the expected earnings per share (EPS) is $0.63, reflecting a decrease of 1.56% from the previous year [3]. - Over the last 30 days, the Zacks Consensus Estimate for International Paper has risen by 6.38%, with four estimates moving higher and no negative revisions [3]. - For the full year, the earnings estimate is $2.01 per share, indicating a decline of 6.94% from the previous year [4]. - The current year’s revisions trend is positive, with three estimates increasing and one negative revision, resulting in an 8.67% boost to the consensus estimate [4]. Zacks Rank - International Paper currently holds a Zacks Rank 1 (Strong Buy), indicating strong potential for stock performance based on earnings estimate revisions [5]. - Research indicates that stocks with Zacks Rank 1 and 2 significantly outperform the S&P 500 [5]. Stock Performance - The stock has appreciated by 6.9% over the past four weeks due to favorable estimate revisions, suggesting further upside potential [6].

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]