Core Viewpoint - International Paper (IP) is recommending its shareholders to vote "FOR" the proposal related to the acquisition of DS Smith Plc, which is expected to enhance its position in sustainable packaging solutions and improve profitability through increased vertical integration [1][3]. Group 1: Acquisition Details - IP has filed a definitive proxy statement with the SEC regarding the acquisition of DS Smith, which is structured as an acquisition in accordance with the U.K. Takeover Code and English law [1][3]. - The special meeting for IP shareholders to vote on the share issuance related to the acquisition is scheduled for October 11, 2024 [2][3]. - DS Smith has also published its scheme document in the U.K., with its shareholder meeting set for October 7, 2024, to approve the combination [2][3]. Group 2: Strategic Benefits - The combination is anticipated to create a global leader in sustainable packaging, focusing on the North American and European markets [3]. - The merger aims to leverage complementary business models to enhance profitability and customer value through improved offerings and innovation [3]. - The acquisition is expected to accelerate sustainability initiatives for the benefit of all stakeholders involved [3]. Group 3: Company Overview - International Paper is a major global provider of renewable fiber-based packaging and pulp products, with net sales of $18.9 billion in 2023 [4]. - The company operates manufacturing facilities across North America, Europe, Latin America, and North Africa, employing approximately 39,000 people globally [4].

Group 1 - Andy Silvernail has been elected as Chairman of the Board of Directors of International Paper, effective October 1, 2024, in addition to his role as CEO [1] - Mark Sutton will retire from the Board of Directors on September 30, 2024, after serving as Chairman since retiring as CEO in May 2024 [1] - Chris Connor, Lead Director, expressed gratitude for Sutton's leadership and contributions to strengthening the company's balance sheet and focusing its portfolio [1] Group 2 - Silvernail joined International Paper as CEO in May 2024 and has over 20 years of experience in leading global companies in manufacturing and technology [1] - His previous roles include Chairman and CEO of Madison Industries and IDEX Corporation, where he achieved over 500% total shareholder return during his tenure [1] - International Paper reported net sales of $18.9 billion for 2023 and employs approximately 39,000 colleagues globally [2]

Group 1 - International Paper appointed Tom Hamic as Executive Vice President and President of North American Packaging Solutions, effective September 1, 2024 [1] - Hamic will oversee the company's Container and Containerboard businesses in North America [1] - The appointment reflects the company's confidence in Hamic's leadership abilities, as stated by CEO Andy Silvernail [1] Group 2 - International Paper is a global producer of sustainable packaging, pulp, and fiber-based products, and is one of the largest recyclers in the world [2] - The company is headquartered in Memphis, Tennessee, and employs approximately 39,000 people globally [2] - In 2023, International Paper reported net sales of $18.9 billion [2]

Core Insights - The National Fish and Wildlife Foundation (NFWF) announced $2.5 million in grants aimed at improving, restoring, and expanding forest and wetland habitats in the Lower Mississippi Alluvial Valley, generating a total conservation impact of $5.4 million with matching contributions [1][2]. Funding and Partnerships - The grants are part of the Lower Mississippi Alluvial Valley Restoration Fund (LMAV Fund), a collaboration involving NFWF, the U.S. Department of Agriculture's Natural Resources Conservation Service, U.S. Fish and Wildlife Service, International Paper, and the Walton Family Foundation [1][5]. - This initiative marks the seventh year of funding through this public-private partnership, which supports voluntary conservation actions in the region [1]. Project Goals and Impact - The funded projects will enhance and restore both private and public lands through various activities, including water management infrastructure installation, technical assistance for landowners, tree establishment, and wetland reconstruction [2][5]. - The initiative aims to plant over 4.2 million bottomland hardwood seedlings, improve hydrology on 300 acres of wetlands, and restore 3,900 acres of existing hardwood forest [3][5]. Ecological Significance - The Lower Mississippi Alluvial Valley is crucial for improving water quality, mitigating climate change, providing wildlife habitat, and supporting local economies [3][4]. - More than 80% of the forests and wetlands in the region are privately owned, necessitating outreach and educational activities to promote voluntary conservation [3][4]. Wildlife and Biodiversity - The projects will benefit various species, including the Louisiana black bear, swamp rabbit, alligator gar, and numerous forest birds, contributing to the protection of vulnerable species like the red-cockaded woodpecker and pallid sturgeon [2][3]. - The Mississippi Alluvial Valley is home to a diverse array of wildlife and serves as a critical habitat for over 60% of North America's bird species during migration [3][4].

Core Viewpoint - International Paper reported a mixed performance in its Q2 2024 earnings, with adjusted earnings surpassing estimates but showing a year-over-year decline due to lower prices in key segments [2][3]. Financial Performance - Adjusted earnings per share were 55 cents, exceeding the Zacks Consensus Estimate of 40 cents by 38%, but down 7% year-over-year [2]. - Net sales reached approximately $4.7 billion, a 1% increase from the previous year, although it fell short of the consensus estimate of $4.8 billion [2]. - Adjusted EBITDA was $561 million, compared to $570 million in the same quarter last year, with an adjusted EBITDA margin of 11.9%, reflecting a 30-basis point contraction year-over-year [3]. Segment Performance - **Industrial Packaging**: Sales totaled $3.9 billion, up 1% year-over-year, with operating profit declining 4% to $291 million. Total volumes increased by 2.4% to 4,037 thousand short tons [4]. - **Global Cellulose Fibers**: Sales rose 3% year-over-year to $717 million, with operating profit at $31 million, marking a return to profitability after two quarters of losses. Volumes increased by 9% to 684 thousand metric tons [5]. Cost and Debt Position - Adjusted cost of sales was $3.3 billion, down 0.7% from the previous year, while gross profit increased by 6% to $1.4 billion [3]. - Cash and temporary investments totaled $1.05 billion at the end of Q2, down from $1.11 billion at the end of 2023. Long-term debt decreased to $5.33 billion from $5.46 billion [6]. Future Expectations - The company anticipates lower volumes in the Industrial Packaging segment for Q3 due to seasonal factors and one less operational day. Earnings are expected to dip from Q2 levels [8]. - A downward trend in estimates has been observed, with a significant shift of -62.4% in consensus estimates over the past month [9]. Investment Scores - International Paper holds an average Growth Score of C and a Momentum Score of F, but a Value Score of B, placing it in the top 40% for value investment strategy [10].

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].