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]

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]

Earnings Performance - Net earnings in Q1 2024 were $56 million ($0.16 per diluted share), compared to a loss of $(284) million ($(0.82) per diluted share) in Q4 2023 and earnings of $172 million ($0.49 per diluted share) in Q1 2023[110] - Adjusted operating earnings in Q1 2024 were $61 million ($0.17 per diluted share), compared to $142 million ($0.41 per diluted share) in Q4 2023 and $185 million ($0.53 per diluted share) in Q1 2023[110] - Earnings from continuing operations in Q1 2024 benefited from higher average sales prices and favorable mix ($47 million) compared to Q4 2023[124] - Compared to Q1 2023, Q1 2024 benefited from lower operating costs ($15 million) and lower raw material and freight costs ($48 million)[126] - Adjusted operating profit was $169 million in Q1 2024, down from $257 million in Q4 2023 and $306 million in Q1 2023[130] Sales and Volume Trends - Sales price indexes improved across the portfolio in Q1 2024, with a $40 per ton increase in February expected to flow through sales contracts in Q2 and Q3 2024[112] - Volume in the North American Industrial Packaging business was lower in Q1 2024 due to seasonally lower shipments and impacts from a January freeze[112] - Sales volumes for Industrial Packaging were 3,991 thousand short tons in Q1 2024, up from 3,914 thousand short tons in Q1 2023[136] - Corrugated Packaging sales volumes were 2,232 thousand short tons in Q1 2024, down from 2,381 thousand short tons in Q1 2023[136] - Global Cellulose Fibers sales volumes were 729 thousand metric tons in Q1 2024, up from 688 thousand metric tons in Q1 2023[136] Segment Performance - Total business segment operating profits were $169 million in Q1 2024, compared to $257 million in Q4 2023 and $306 million in Q1 2023[131] - Industrial Packaging segment operating profit was $216 million in Q1 2024, while Global Cellulose Fibers segment had a loss of $47 million[130] - Industrial Packaging net sales for Q1 2024 were $3.808 billion, 1% lower than Q4 2023 and 7% lower than Q1 2023[150] - Industrial Packaging operating profit in Q1 2024 was $216 million, 31% lower than Q4 2023 and 33% lower than Q1 2023[150] - North American Industrial Packaging sales in Q1 2024 were $3.486 billion, with operating profit of $192 million[151] - EMEA Industrial Packaging sales in Q1 2024 were $348 million, with operating profit of $24 million[153] - Global Cellulose Fibers net sales in Q1 2024 were $704 million, 7% higher than Q4 2023 and 13% lower than Q1 2023[156] - Global Cellulose Fibers operating loss in Q1 2024 was $47 million, $11 million lower than Q4 2023 and $31 million higher than Q1 2023[156] Costs and Expenses - Full-scale mill annual maintenance outage expense is expected to increase in Q2 2024, including costs associated with the Riverdale mill outage[114] - Total maintenance and economic downtime in Q1 2024 was 126,000 short tons lower than Q4 2023 for Global Cellulose Fibers[156] - Planned maintenance downtime costs in Q1 2024 were lower compared to Q4 2023 for both Industrial Packaging and Global Cellulose Fibers[152][156] - Input costs for Global Cellulose Fibers in Q1 2024 were higher primarily for energy, but lower for chemicals, wood, and energy compared to Q1 2023[156] Financial Position and Cash Flow - Net sales in Q1 2024 were $4.6 billion, flat compared to Q4 2023 but down from $5.0 billion in Q1 2023[123] - Cash provided by operations increased to $395 million in Q1 2024, up from $345 million in Q1 2023, driven by timing of mill outage spending and inventory adjustments[157] - Capital investments totaled $251 million in Q1 2024, down from $341 million in Q1 2023, with full-year 2024 capital spending expected to be $800 million to $1.0 billion[158] - Debt decreased by $3 million in Q1 2024, compared to a $257 million increase in Q1 2023[158] - Contractual obligations for future debt payments include $138 million in 2024, $189 million in 2025, $142 million in 2026, $332 million in 2027, $670 million in 2028, and $4.1 billion thereafter[159] - The company holds long-term credit ratings of BBB (S&P) and Baa2 (Moody's), with short-term ratings of A2 (S&P) and P2 (Moody's)[159] - Credit agreements total $1.9 billion, including a $1.4 billion bank credit agreement and a $500 million receivables securitization program[160] - The company repurchased $22 million of common stock in Q1 2024, with $2.96 billion remaining authorized for share repurchases as of March 31, 2024[163] - Cash dividend payments totaled $161 million in Q1 2024, consistent with $162 million in Q1 2023, at $0.4625 per share[164] - The company expects to meet capital expenditures, debt servicing, and dividend payments with current cash balances and operating cash flows, supplemented by credit facilities[162] - The pension plan is fully funded, with no anticipated cash contributions required for the next 12 months[165] Acquisitions and Divestitures - The company announced its intent to acquire DS Smith in an all-stock transaction valued at approximately $9.9 billion on April 16, 2024[111] - The company completed the sale of its 50% equity interest in Ilim S.A. for $484 million in cash on September 18, 2023[138] Tax and Interest - Income tax provision was $27 million in Q1 2024 with an effective tax rate of 32%, compared to a $61 million benefit in Q4 2023 with a 19% rate[140][141] - Net interest expense decreased to $46 million in Q1 2024 from $52 million in Q4 2023 and $62 million in Q1 2023[144] - Operational effective tax rate was 31% in Q1 2024, lower than 34% in Q4 2023 due to increased deferred tax valuation allowance[140]

Financial Data and Key Metrics - Q1 2024 earnings were generally in line with the outlook, representing a trough due to seasonally low volumes, higher OCC costs, and the majority impact from 2023 sales price index declines [6] - Earnings were negatively impacted by approximately $38 million from the January winter freeze and $14 million from a fire at the Ixtac, Mexico box plant [6] - Free cash flow for the quarter was $144 million, compared to $193 million in Q1 2023, which included a final IRS settlement [8] - Operating earnings per share were $0.17, down from $0.41 in Q4 2023, with $0.10 per share impact from the winter freeze and fire [9] - Price and mix benefits contributed $0.14 per share, partially offset by prior sales price index declines [9] - Volume was unfavorable by $0.08 per share due to seasonally low shipments and the winter storm [9] - Operations and costs were unfavorable by $0.13 per share, including $0.07 per share from the winter freeze and fire [10] Business Line Data and Key Metrics Industrial Packaging - Price and mix benefits contributed approximately $110 million, partially offset by $53 million from prior sales price index declines [11] - Volume was lower due to seasonally low shipments and the January freeze [12] - Operations and costs included a $34 million unfavorable impact from the winter freeze and fire, with additional cost inflation and lower fixed cost absorption [13] - Demand trends show eCommerce up mid-single digits year-over-year, with stable food and beverage demand and improving fresh food and protein segments [14] - Industry box demand is expected to grow 2% to 3% in 2024 [15] Global Cellulose Fibers - Price and mix benefits were driven by higher absorbent pulp mix and reduced commodity grades [16] - Volume was flat as improved demand for absorbent pulp offset lower sales of commodity grades [16] - Operations and costs were unfavorable due to the winter freeze and cost inflation, partially offset by $12 million in fixed cost savings from mill closures [16] - Planned maintenance outages were lower by $10 million, but a $24 million outage at the Georgetown white papers machine impacted earnings [17] Market Data and Key Metrics - North American packaging demand is stable to improving, with eCommerce showing resilience and food and beverage segments remaining stable [14] - The produce segment was flat in Q1 but expected to recover in Q2, while the protein segment is improving following supply reductions [15] - The beverage segment remains under pressure due to reduced consumption of specialty beverages and bottled beer [15] Company Strategy and Industry Competition - The company is focused on accelerating margin improvement and driving profitable growth through strategic initiatives, including the Box Go-to-Market strategy and mill optimization [7] - A combination with DS Smith is seen as a catalyst for creating significant value for shareholders [7] - Investments are being made to strengthen packaging businesses and improve capabilities to serve customer needs [22] - The company is reducing exposure to commodity grades in the Global Cellulose Fibers business and aligning resources with the most attractive customers and segments [23] Management Commentary on Operating Environment and Future Outlook - Management is encouraged by positive market momentum and signs of demand recovery [5] - The company expects significant earnings improvement based on positive market trends and benefits from commercial and cost improvement initiatives [8] - The Box Go-to-Market strategy exceeded expectations in Q1, with additional opportunities expected throughout the year [22] - The company is preparing for higher utilization and increased equipment utilization, with proactive maintenance spending focused on improving productivity and efficiencies [18] Other Important Information - The company announced a CEO transition, with Andy Silvernail stepping into the role on May 1, 2024 [83] - The outgoing CEO expressed confidence in the company's future and the leadership of the new CEO [83] Q&A Session Summary Question: Benefits from the Box Go-to-Market strategy and incremental benefits in Q2 and beyond [28] - The company exceeded its initial outlook of $70 million in benefits, achieving $110 million in Q1 due to better-than-expected local improvements and investments in commercial teams [30] - Additional benefits are expected to flow through in Q2 and beyond as the strategy continues to be executed [30] Question: North American Industry Box shipment growth revision to 2%-3% in 2024 [31] - The revision reflects a conservative outlook due to a tough economic environment, but management believes growth could be closer to 3% or even 4% if the economy improves [32] Question: Operations and costs in the packaging business [35] - The $70 million negative impact in Q2 includes proactive maintenance spending and higher inflation, with additional costs related to labor, materials, and contracted services [36][37][38] Question: Market prices and corporate expenses [49] - The company does not comment on forward-looking pricing but expects the $40 per ton increase to flow through contracts over the next few quarters [50] - Corporate expenses are expected to remain within the $60 million to $80 million range for the year, with some volatility quarter-to-quarter [50] Question: EBITDA margin targets and customer mix changes [52][56] - The company aims for an EBITDA margin in the high teens (18%) on its way to 20%, with a focus on improving profitability through the Box Go-to-Market strategy [53] - The customer mix shifted during COVID, with a focus on large national accounts, but the company is now working to improve the economics of these accounts and return to more profitable regional and local customers [59][60] Question: Maintenance and investment costs [63] - Maintenance costs have increased due to inflation and targeted spending, particularly in the Box business, with a focus on reliability and productivity improvements [64][65][68] Question: Operational readiness and customer mix targets [78] - The company is seeing productivity improvements and is focused on targeted maintenance spending to support market growth [79] - The local business is expected to grow as a percentage of total business, rebalancing the mix between national and regional customers [80]

First Quarter 2024 Earnings April 25, 2024 Forward-Looking Statements Certain statements in this press release that are not historical in nature may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking 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,” “confide ...

Exhibit 99.1 News Release International Paper Reports First Quarter 2024 Results MEMPHIS, Tenn. – April 25, 2024 – International Paper (NYSE: IP) today reported first quarter 2024 financial results. FIRST QUARTER 2024 HIGHLIGHTS "International Paper made progress executing our strategic initiatives in the first quarter,'' said Mark Sutton, Chairman and Chief Executive Officer. "We saw commercial benefits from our business strategies, as well as cost benefits from mill system optimization. Although costs rem ...

Part I [Business Overview](index=5&type=section&id=Item%201.%20Business) International Paper is a global producer of fiber-based packaging and pulp, strategically divesting Ilim and closing mills in 2023 - International Paper is a global producer of renewable fiber-based packaging and pulp products with operations in North America, Latin America, Europe, and North Africa[9](index=9&type=chunk) - The company completed the sale of its **50% equity interest in Ilim S.A.** on September 18, 2023, divesting all investments in Russia[13](index=13&type=chunk) - International Paper permanently closed its containerboard mill in Orange, Texas, and ceased production on two pulp machines at Riegelwood, NC, and Pensacola, FL mills in December 2023, resulting in approximately **$347 million** in non-cash asset write-offs and accelerated depreciation, and **$81 million** in cash severance and shutdown charges for the mill closure, plus **$75 million** and **$37 million** respectively for the machine shutdowns[14](index=14&type=chunk) Capital Spending | Year | Capital Spending (approx.) | | :--- | :--- | | 2019-2023 | $4.6 billion | | 2023 | $1.1 billion | | 2024 (expected) | $800 million - $1.0 billion | [General](index=5&type=section&id=General) The company operates globally in Industrial Packaging and Global Cellulose Fibers, guided by core values - International Paper operates 23 pulp and packaging mills, 162 converting and packaging plants, 16 recycling plants, and three bag facilities in the U.S. as of December 31, 2023, with additional facilities in Canada, Europe, North Africa, and Latin America[10](index=10&type=chunk) - The company's businesses are separated into two segments: Industrial Packaging and Global Cellulose Fibers[12](index=12&type=chunk) - Core values, known as 'The IP Way,' include safety, ethics, and stewardship, with new values added in 2023: Think the Customer and Include and Engage[11](index=11&type=chunk)[17](index=17&type=chunk) [Human Capital](index=6&type=section&id=Human%20Capital) International Paper employs approximately 39,000 globally, focusing on safety, development, and diversity goals - As of December 31, 2023, International Paper had approximately **39,000** employees globally, with nearly **33,000** in the U.S. Of U.S. employees, **22,900** are hourly, with unions representing about **14,200**[21](index=21&type=chunk) - The company emphasizes safety, employee wellbeing (EAP), continuous learning (**4.6 million** learning activities in 2023), leadership development (REACH, Global Manufacturing Training Initiative, IP Leadership Institute), and tuition reimbursement/student loan assistance[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk) - In 2023, 'Include and Engage' was added as a core value, with a Vision 2030 goal to achieve **30%** overall representation of women, **50%** women in salaried positions, and **30%** racial and ethnic minority representation in U.S. salaried positions[33](index=33&type=chunk) - The company invested approximately **$20 million** in community engagement in 2023, with a Vision 2030 goal to improve the lives of **100 million** people, including through its award-winning 'Fighting Period Poverty in Our Communities' program[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) [Competition and Costs](index=8&type=section&id=Competition%20and%20Costs) The pulp and packaging sectors are highly competitive, driven by price, cost, product quality, and services - The pulp and packaging sectors are large, fragmented, and highly competitive, with competition from other forest products companies and substitutes for wood-fiber products[44](index=44&type=chunk) - Competitive factors include price, cost, product quality, and services[45](index=45&type=chunk) [Marketing and Distribution](index=9&type=section&id=Marketing%20and%20Distribution) Products are sold directly to end users and converters, and through agents, resellers, and distributors - The company sells products directly to end users and converters, as well as through agents, resellers, and distributors[46](index=46&type=chunk) [Description of Principal Products](index=9&type=section&id=Description%20of%20Principal%20Products) Principal products are detailed in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Principal products are described in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, pages 35 and 36[46](index=46&type=chunk) [Sales Volumes by Product](index=9&type=section&id=Sales%20Volumes%20by%20Product) This section provides a table detailing sales volumes across industrial packaging and global cellulose fiber products Sales Volumes by Product (in thousands of short tons, except as noted) | Product | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **Industrial Packaging** | | | | | Corrugated Packaging (b) | 9,428 | 10,202 | 10,787 | | Containerboard | 2,604 | 2,642 | 2,893 | | Recycling | 2,152 | 2,190 | 2,223 | | Saturated Kraft | 160 | 188 | 186 | | Gypsum/Release Kraft | 237 | 251 | 234 | | EMEA Packaging (b) | 1,282 | 1,376 | 1,546 | | **Total Industrial Packaging** | **15,863** | **16,849** | **17,869** | | **Global Cellulose Fibers (in thousands of metric tons) (c)** | **2,681** | **2,893** | **2,970** | [Government Regulation](index=9&type=section&id=Government%20Regulation) The company operates globally, subject to diverse laws and regulations, incurring compliance costs and facing potential penalties - The company operates globally and is subject to various laws and regulations governing business, manufacturing, and environmental protection in each jurisdiction[50](index=50&type=chunk) - Compliance costs are incurred, and violations can lead to substantial fines, sanctions, and reputational damage[50](index=50&type=chunk) [Environmental Protection](index=9&type=section&id=Environmental%20Protection) Stewardship is a core value, with Vision 2030 goals for sustainable operations and significant environmental capital expenditures - Stewardship is a core value, with Vision 2030 goals focused on healthy forests, thriving communities, sustainable operations, and renewable solutions[51](index=51&type=chunk)[53](index=53&type=chunk) - The company spent approximately **$40 million** in 2023 on environmental capital projects and expects to spend **$35 million** in 2024, with similar projections for 2025 and 2026[54](index=54&type=chunk) - International Paper is a Potentially Responsible Party (PRP) in environmental remediation actions under CERCLA and similar state laws, with liability typically allocated among PRPs[56](index=56&type=chunk) [Climate Change](index=10&type=section&id=Climate%20Change) The company recognizes climate change impacts, aligning with TCFD and setting Vision 2030 goals for GHG emission reduction - The company recognizes climate change impacts and aligns its sustainability reporting with TCFD recommendations, identifying climate-related opportunities and evaluating risks through its enterprise risk management process[57](index=57&type=chunk) - Vision 2030 goals include a **35%** reduction in Scope 1, 2, and 3 GHG emissions by 2030 (from 2019 levels), approved by SBTi as consistent with the 2015 Paris Agreement[60](index=60&type=chunk) - The company uses carbon-neutral biomass and manufacturing residuals for most of its energy and is an early adopter of the Taskforce on Nature-related Financial Disclosures (TNFD)[61](index=61&type=chunk)[60](index=60&type=chunk) [Raw Materials](index=13&type=section&id=Raw%20Materials) Essential raw materials include wood fiber (pulpwood, wood chips, OCC) and chemicals like caustic soda and starch - Essential raw materials include wood fiber (pulpwood, wood chips, OCC) and chemicals (caustic soda, starch, adhesives)[79](index=79&type=chunk) [Information About Our Executive Officers](index=13&type=section&id=Information%20About%20Our%20Executive%20Officers) This section lists the executive officers of the company as of the filing date, including key leadership roles - The report lists the executive officers as of the filing date, including Mark S. Sutton (Chairman and CEO), Clay R. Ellis (SVP - Global Cellulose Fibers and IP Asia), Aimee Gregg (SVP, Supply Chain and IT), W. Thomas Hamic (SVP - North American Container and CCO), Allison B. Magness (SVP Manufacturing and EHS), Timothy S. Nicholls (SVP and CFO), Thomas J. Plath (SVP - Human Resources and Corporate Affairs), James P. Royalty, Jr. (SVP - Containerboard and Recycling), Joseph R. Saab (SVP, General Counsel and Corporate Secretary), and Ksenia N. Sosnina (SVP, Europe, Middle East & Africa)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) [Forward-looking Statements](index=14&type=section&id=Forward-looking%20Statements) The report contains forward-looking statements subject to risks and uncertainties, including climate change and economic conditions - The report contains forward-looking statements identified by words like 'expects,' 'anticipates,' 'believes,' 'estimates,' and 'could,' which are subject to risks and uncertainties that could cause actual results to differ materially[91](index=91&type=chunk) - Key risk categories include climate change, indebtedness, economic conditions, international business, pension/healthcare costs, and legal/regulatory compliance[91](index=91&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from macroeconomic conditions, international business, climate change, indebtedness, competition, and operational/legal challenges - Adverse macroeconomic conditions, including inflation, elevated interest rates, and challenging labor markets, have negatively impacted and are expected to continue to affect the company's operations, leading to lower demand and higher costs[95](index=95&type=chunk)[97](index=97&type=chunk) - International operations are subject to risks such as economic/political instability, geopolitical events (e.g., Russia-Ukraine, Israel-Hamas conflicts), currency fluctuations, trade protectionism, and regulatory environments, which could adversely affect financial results[99](index=99&type=chunk)[101](index=101&type=chunk) - Climate change and sustainability matters pose risks including operational impacts from severe weather, supply chain disruptions, increased raw material costs, and higher capital/operational costs to meet GHG emission reduction targets (e.g., Vision 2030 goal of **35% reduction in Scope 1, 2, and 3 GHG emissions by 2030**)[104](index=104&type=chunk)[106](index=106&type=chunk) - The company's approximately **$5.6 billion** indebtedness as of December 31, 2023, could limit financing, divert cash flow, and increase vulnerability to economic downturns or interest rate changes[108](index=108&type=chunk)[110](index=110&type=chunk) - The company operates in a challenging labor market, making it difficult to attract and retain qualified personnel, leading to higher labor costs and potential shortages. Union negotiations also pose risks of work stoppages or unfavorable contract terms[129](index=129&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Cybersecurity threats, including targeted attacks, ransomware, and data breaches, are increasing in volume and complexity, potentially leading to lost sales, operational disruptions, reputational damage, and significant remediation costs[133](index=133&type=chunk)[135](index=135&type=chunk) [RISKS RELATING TO MARKET AND ECONOMIC FACTORS](index=15&type=section&id=RISKS%20RELATING%20TO%20MARKET%20AND%20ECONOMIC%20FACTORS) Adverse economic conditions, including inflation and high interest rates, along with international instability, impact demand, supply chains, and costs - General economic conditions, including inflationary pressures and elevated interest rates, adversely affect demand for products, supply chains, and labor, leading to lower sales and higher costs[95](index=95&type=chunk)[97](index=97&type=chunk) - International business risks include economic/political instability, geopolitical events (e.g., Russia-Ukraine, Israel-Hamas conflicts), currency fluctuations, trade protectionist policies, and adverse tax consequences[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - The sale of the Ilim ownership stake was completed in Q3 2023, but ongoing geopolitical instability may still affect the company[101](index=101&type=chunk) [RISKS RELATED TO CLIMATE AND WEATHER](index=17&type=section&id=RISKS%20RELATED%20TO%20CLIMATE%20AND%20WEATHER) Climate change and severe weather can disrupt operations and supply chains, while sustainability pressures increase costs and reputational risks - Climate change impacts, such as rising temperatures and severe weather, can cause operational disruptions, supply chain issues, and increased raw material costs[104](index=104&type=chunk) - Increased focus on sustainability leads to more prescriptive reporting requirements and pressure to meet targets (e.g., Vision 2030 GHG reduction goal), increasing capital and operational costs[105](index=105&type=chunk)[106](index=106&type=chunk) - Failure to meet sustainability targets or negative perceptions could harm reputation and stakeholder relationships[106](index=106&type=chunk) [RISKS RELATED TO OUR INDEBTEDNESS](index=18&type=section&id=RISKS%20RELATED%20TO%20OUR%20INDEBTEDNESS) High indebtedness, variable rate debt, and potential credit rating downgrades could limit financing, increase costs, and accelerate tax liabilities - As of December 31, 2023, the company had approximately **$5.6 billion** in outstanding indebtedness, which could limit financing, divert cash flow, and increase vulnerability to economic downturns[108](index=108&type=chunk) - Variable rate debt (approx. **$908 million** as of Dec 31, 2023) exposes the company to interest rate risk, with significant rate increases in 2022-2023 impacting costs[110](index=110&type=chunk) - A downgrade in credit ratings could increase borrowing costs, limit capital market access, and require collateral for derivatives[111](index=111&type=chunk)[113](index=113&type=chunk) - Downgrades of banks issuing letters of credit supporting Temple-Inland timber monetization notes could lead to additional costs or acceleration of up to **$485 million** in deferred income taxes[114](index=114&type=chunk) [RISKS RELATING TO OUR PENSION AND HEALTHCARE COSTS](index=19&type=section&id=RISKS%20RELATING%20TO%20OUR%20PENSION%20AND%20HEALTHCARE%20COSTS) Pension and healthcare costs are sensitive to market returns, interest rates, and regulatory changes, potentially increasing future cash outflows - Pension and healthcare costs are influenced by market returns on assets, interest rates, number of retirees, and changes in legal requirements, potentially increasing future costs[115](index=115&type=chunk) - While the U.S. funded pension plan was overfunded by **$118 million** on a projected benefit obligation basis at December 31, 2023, future cash payments may be required, reducing available cash[116](index=116&type=chunk) [RISKS RELATING TO INDUSTRY CONDITIONS](index=20&type=section&id=RISKS%20RELATING%20TO%20INDUSTRY%20CONDITIONS) Profitability is affected by raw material, energy, and transportation costs, with limited ability to pass on increases due to competition and market cyclicality - Profitability is affected by changes in raw material costs (wood fiber, recycled fiber, chemicals), energy, and transportation, with significant increases experienced due to ongoing inflationary conditions[117](index=117&type=chunk) - The company may be unable to fully recoup cost increases through price adjustments due to highly competitive industry segments[117](index=117&type=chunk) - Product prices and demand are sensitive to economic cyclicality, customer/consumer preferences (e.g., shifts to non-fiber substitutes), and government regulations (e.g., single-use packaging)[118](index=118&type=chunk)[119](index=119&type=chunk) - Competition from other forest products companies, substitutes (plastics, metal), and new entrants, along with product innovations and AI/machine learning, could negatively impact financial results[120](index=120&type=chunk) [RISKS RELATING TO OUR OPERATIONS](index=20&type=section&id=RISKS%20RELATING%20TO%20OUR%20OPERATIONS) Operational disruptions, unachieved strategic transaction benefits, potential tax liabilities, and labor market challenges pose risks - Material disruptions at manufacturing facilities due to adverse weather, raw material shortages, cyber-attacks, equipment failures, or labor difficulties could prevent meeting customer demand and negatively impact financial results[121](index=121&type=chunk)[122](index=122&type=chunk) - Strategic transactions (acquisitions, divestitures, capital investments) may not achieve expected benefits, leading to impairment charges or unanticipated disruptions[123](index=123&type=chunk)[124](index=124&type=chunk) - The company could be exposed to liability for Brazilian taxes under agreements with Sylvamo Corporation, potentially requiring payment of **60%** of the first **$300 million** and **100%** over **$300 million** for assessments totaling approximately **$393 million**[128](index=128&type=chunk) - Challenges in attracting and retaining qualified personnel, particularly in a competitive labor market, can lead to higher labor costs and shortages. Union negotiations also present risks of work stoppages[129](index=129&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) [RISKS RELATING TO LEGAL PROCEEDINGS AND COMPLIANCE COSTS](index=25&type=section&id=RISKS%20RELATING%20TO%20LEGAL%20PROCEEDINGS%20AND%20COMPLIANCE%20COSTS) Compliance with diverse global laws, evolving data privacy and AI regulations, and unfavorable legal outcomes could lead to litigation, fines, and tax liabilities - Operations are subject to a wide variety of U.S. and non-U.S. laws and regulations (environmental, health, safety, labor, data privacy, tax), with changes or non-compliance potentially leading to litigation, fines, and reputational harm[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - The evolving regulatory environment for data privacy (e.g., GDPR, CCPA) and AI (e.g., Biden Executive Order) may require significant resources for compliance, changes to business practices, and could result in penalties or competitive disadvantages[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - Unfavorable outcomes in legal, regulatory, or governmental proceedings, including environmental matters, could have a material adverse impact on financial results[148](index=148&type=chunk) - The tax-free status of the Sylvamo Corporation spin-off could be challenged by the IRS, potentially resulting in significant U.S. federal income tax liabilities for International Paper and its shareholders[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) [Unresolved Staff Comments](index=27&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS.) There are no unresolved staff comments to report - No unresolved staff comments[152](index=152&type=chunk) [Cybersecurity](index=27&type=section&id=ITEM%201C.%20CYBERSECURITY.) International Paper integrates cybersecurity risk management into its enterprise risk program, employing layered controls, third-party assessments, and incident response plans - Cybersecurity risk management is integrated into the company's enterprise risk management program, with oversight from the Board of Directors and its Audit and Finance Committee and PPE Committee[153](index=153&type=chunk)[162](index=162&type=chunk) - The IT Risk Governance Program, led by the CISO, identifies, manages, and measures cybersecurity risks, including targeted attacks, ransomware, and data theft[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[164](index=164&type=chunk) - Key aspects of the cybersecurity program include layered technical controls, independent third-party assessments, employee training, global security policies, and business continuity/incident response procedures[157](index=157&type=chunk)[158](index=158&type=chunk) - The company has processes to oversee third-party service providers' cybersecurity risks, including risk-based due diligence and continuous monitoring[159](index=159&type=chunk) - Cybersecurity events are managed by a Cybersecurity Incident Response Team (CIRT) and escalated to the Business Continuity Incident Command Team and Disclosure Committee for review and materiality assessment[165](index=165&type=chunk) [RISK MANAGEMENT AND STRATEGY](index=27&type=section&id=RISK%20MANAGEMENT%20AND%20STRATEGY) Cybersecurity risk management is integrated into the enterprise risk program, identifying and managing threats through controls, assessments, and training - The company's cybersecurity risk management is part of its overall enterprise risk management program, overseen by the Board of Directors and the ERM Council[153](index=153&type=chunk) - An IT Risk Governance Program, carried out by an IT Risk Identification and Mitigation Team (IT RIM), identifies and manages cybersecurity risks such as targeted attacks, ransomware, and data theft[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) - The cybersecurity program includes technical protective capabilities, third-party assessments, employee training, global security policies, and incident response plans[157](index=157&type=chunk) [Engagement of Third Parties](index=28&type=section&id=Engagement%20of%20Third%20Parties) The company engages independent third parties for incident response, security program assessments, and penetration testing, with internal audit also conducting assessments - The company engages independent third parties for incident response expertise, annual security program assessments (benchmarked against NIST Cybersecurity Framework), and external/internal penetration testing[158](index=158&type=chunk)[161](index=161&type=chunk) - The Internal Audit team also conducts annual assessments of cyber programs and controls[158](index=158&type=chunk) [Oversight of Third Parties](index=28&type=section&id=Oversight%20of%20Third%20Parties) The cybersecurity program includes processes for overseeing and identifying material risks from third-party service providers through due diligence and monitoring - The cybersecurity risk management program includes processes to oversee and identify material risks from third-party service providers, with risk-based due diligence and continuous monitoring for critical services[159](index=159&type=chunk) - Service providers are required to provide prompt notification of any actual or suspected breaches[159](index=159&type=chunk) [GOVERNANCE](index=29&type=section&id=GOVERNANCE) The Board oversees cybersecurity risk management, supported by the CISO and a cyber-incident response plan for operational and non-operational events - The Board of Directors, supported by the Audit and Finance Committee and PPE Committee, oversees cybersecurity risk management, receiving periodic updates from management[162](index=162&type=chunk)[163](index=163&type=chunk) - The CISO, with over **25 years** in IT and leading security efforts since 2011, reports to the CIO and leads the cybersecurity risk management program[164](index=164&type=chunk) - A cyber-incident response plan, led by the Cybersecurity Incident Response Team (CIRT), addresses operational and non-operational events, with escalation procedures for significant incidents[165](index=165&type=chunk) [Properties](index=29&type=section&id=ITEM%202.%20PROPERTIES.) International Paper's owned production facilities are in good operating condition, with planned capital investments for 2024 ranging from **$800 million to $1.0 billion** - A listing of production facilities by segment is provided in Appendix I, with the vast majority being owned by the company[166](index=166&type=chunk) - Facilities are in good operating condition, and the company continuously evaluates modernization or other alternatives for higher-cost facilities[166](index=166&type=chunk) - Capital spending for 2024 is expected to be approximately **$800 million to $1.0 billion**[167](index=167&type=chunk) [Mills and Plants](index=29&type=section&id=Mills%20and%20Plants) The company's production facilities, listed in Appendix I, are generally owned and maintained in good operating condition - The company's production facilities are listed in Appendix I and are generally owned and in good operating condition[166](index=166&type=chunk) [Capital Investments and Dispositions](index=29&type=section&id=Capital%20Investments%20and%20Dispositions) The company evaluates business opportunities, including acquisitions and dispositions, with planned capital investments for 2024 of **$800 million to $1.0 billion** - The company continually evaluates business opportunities, including acquisitions, sales, and dispositions of properties[167](index=167&type=chunk) - Planned capital investments for 2024 are approximately **$800 million to $1.0 billion**[167](index=167&type=chunk) [Legal Proceedings](index=30&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS.) Legal proceedings are detailed in Note 14, with no current environmental proceedings expected to result in monetary sanctions of **$1 million** or more - Information concerning legal proceedings is detailed in Note 14, Commitments and Contingent Liabilities[168](index=168&type=chunk) - The company is not subject to any environmental proceedings likely to result in monetary sanctions of **$1 million** or more[168](index=168&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) This item is not applicable to the company - Mine Safety Disclosures are not applicable[169](index=169&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES.) International Paper's common shares trade on NYSE, with regular dividends and a **$2.96 billion** share repurchase authorization remaining - International Paper's common shares are traded on the New York Stock Exchange (NYSE: **IP**)[171](index=171&type=chunk) - As of February 9, 2024, there were approximately **8,188** record holders of common stock[171](index=171&type=chunk) - The company pays regular quarterly cash dividends and expects to continue doing so, subject to Board approval[172](index=172&type=chunk) Purchases of Equity Securities by the Issuer | Period | Total Number of Shares Purchased (a) | Average Price Paid per Share | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in billions) | | :--- | :--- | :--- | :--- | | October 1, 2023 - October 31, 2023 | 5,373 | $35.19 | $2.96 | | November 1, 2023 - November 30, 2023 | 3,992 | $33.71 | $2.96 | | December 1, 2023 - December 31, 2023 | 1,241 | $38.82 | $2.96 | | **Total** | **10,606** | | | - As of December 31, 2023, approximately **$2.96 billion** aggregate shares of common stock remained authorized for repurchase under a program with no expiration date[173](index=173&type=chunk) [Reserved](index=33&type=section&id=ITEM%206.%20RESERVED) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) 2023 net earnings decreased to **$288 million** due to lower demand and cost inflation; 2024 expects market recovery and **$400 million** in benefits from initiatives Full-Year Net Earnings Attributable to Shareholders | Year | Net Earnings (in millions) | Diluted EPS | | :--- | :--- | :--- | | 2023 | $288 | $0.82 | | 2022 | $1,504 | $4.10 | - 2023 performance was impacted by lower underlying demand, inventory destocking, declining sales prices, and continued cost inflation[180](index=180&type=chunk) - The company completed the sale of its Ilim ownership stake for **$508 million** in 2023 and returned approximately **$840 million** to shareholders (**$640 million** in dividends, **$200 million** in share repurchases)[180](index=180&type=chunk)[184](index=184&type=chunk) - Strategic actions in 2023 included the permanent closure of the Orange, Texas containerboard mill and two pulp machines, resulting in significant non-cash asset write-offs and cash severance charges[185](index=185&type=chunk)[186](index=186&type=chunk) - For full-year 2024, the company expects market recovery, industry growth of approximately **3%** for packaging and fluff pulp, and over **$400 million** in net benefits from commercial and operational initiatives[184](index=184&type=chunk) Cash Flow Summary | Metric | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | Cash provided by operations (including discontinued operations) | $1,833 | $2,174 | | Free Cash Flow | $692 | $1,243 | [Executive Summary](index=35&type=section&id=Executive%20Summary) 2023 net earnings decreased due to lower demand and cost inflation, with strategic actions and initiatives expected to drive 2024 market recovery Full-Year Net Earnings Attributable to Shareholders | Year | Net Earnings (in millions) | Diluted EPS | | :--- | :--- | :--- | | 2023 | $288 | $0.82 | | 2022 | $1,504 | $4.10 | - 2023 was characterized by lower demand, inventory destocking, declining sales prices, and continued cost inflation, leading to lower sales and earnings compared to 2022[180](index=180&type=chunk) - The company completed the sale of its Ilim ownership stake for **$508 million** and returned approximately **$840 million** to shareholders in 2023[180](index=180&type=chunk) - Strategic actions included the permanent closure of the Orange, Texas containerboard mill and two pulp machines, incurring significant charges in Q4 2023[185](index=185&type=chunk)[186](index=186&type=chunk) - For Q1 2024, earnings are expected to trough due to seasonally lower volumes, higher costs, and winter freeze impacts, with full-year 2024 projected as a transitional year with market recovery and over **$400 million** in net benefits from initiatives[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) Adjusted Operating Earnings (Loss) Attributable to Shareholders | Metric | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | Net Earnings (Loss) Attributable to Shareholders | $288 | $1,504 | | Less - Discontinued operations, net of taxes (gain) loss | 14 | 237 | | Earnings (Loss) from Continuing Operations | 302 | 1,741 | | Add back - Non-operating pension expense (income) | 54 | (192) | | Add back - Net special items expense (income) | 572 | 233 | | Income tax effect - Non-operating pension and special items | (173) | (614) | | **Adjusted Operating Earnings (Loss) Attributable to Shareholders** | **$755** | **$1,168** | Adjusted Operating Earnings (Loss) Per Share Attributable to Shareholders | Metric | 2023 (per share) | 2022 (per share) | | :--- | :--- | :--- | | Diluted Earnings (Loss) Per Share Attributable to Shareholders | $0.82 | $4.10 | | Less - Discontinued operations, net of taxes (gain) loss per share | 0.04 | 0.64 | | Diluted Earnings (Loss) Per Share from Continuing Operations | 0.86 | 4.74 | | Add back - Non-operating pension expense (income) per share | 0.15 | (0.52) | | Add back - Net special items expense (income) per share | 1.64 | 0.63 | | Income tax effect per share - Non-operating pension and special items | (0.49) | (1.67) | | **Adjusted Operating Earnings (Loss) Per Share Attributable to Shareholders** | **$2.16** | **$3.18** | [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Total Business Segment Operating Profit decreased by **$599 million** in 2023 due to lower sales, prices, and higher operating costs, partially offset by lower input costs Business Segment Operating Profit (Loss) | Segment | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | Industrial Packaging | $1,266 | $1,742 | | Global Cellulose Fibers | $(17) | $106 | | **Total Business Segment Operating Profit (Loss)** | **$1,249** | **$1,848** | - Total Business Segment Operating Profit (Loss) decreased by **$599 million** in 2023 compared to 2022, primarily due to lower average sales price and unfavorable mix (**$435 million**), lower sales volumes (**$228 million**), and higher operating costs (**$926 million**), partially offset by lower input costs (**$982 million**)[195](index=195&type=chunk) Net Sales | Year | Net Sales (in billions) | | :--- | :--- | | 2023 | $18.9 | | 2022 | $21.2 | - International net sales (including U.S. exports) were **$5.3 billion** (**28%** of total sales) in 2023, down from **$5.9 billion** in 2022[203](index=203&type=chunk) - The 'Building a Better IP' initiatives contributed **$260 million** of earnings in 2023[206](index=206&type=chunk) - The Ilim equity investment results are presented as Discontinued Operations, net of taxes, following its sale in September 2023, including after-tax losses of **$126 million** in 2023 and **$533 million** in 2022 for impairment and transaction costs[209](index=209&type=chunk)[210](index=210&type=chunk) Income Tax Provision (Benefit) and Operational Tax Rate | Metric | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | Net income tax provision (benefit) from continuing operations | $59 | $(236) | | Reported effective income tax rate | 15% | (16)% | | Operational Tax Provision (non-GAAP) | $232 | $378 | | Operational Tax Rate (non-GAAP) | 23% | 24% | - Net corporate interest expense decreased to **$231 million** in 2023 from **$325 million** in 2022, primarily due to higher interest income[215](index=215&type=chunk) [Description of Business Segments](index=42&type=section&id=Description%20of%20Business%20Segments) The company's segments are Industrial Packaging (fiber-based packaging) and Global Cellulose Fibers (sustainable pulp) - Industrial Packaging focuses on fiber-based packaging products like linerboard, medium, and corrugated packaging, with over **13 million tons** of U.S. production capacity annually[224](index=224&type=chunk)[225](index=225&type=chunk) - Global Cellulose Fibers produces sustainable pulp for absorbent hygiene products, textiles, and construction materials, with an annual dried pulp capacity of about **3 million metric tons**[226](index=226&type=chunk) [Business Segment Results](index=43&type=section&id=Business%20Segment%20Results) Both Industrial Packaging and Global Cellulose Fibers experienced decreased operating profits in 2023 due to lower sales, prices, and higher operating costs Industrial Packaging Performance | Metric | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | Net Sales | $15,596 | $17,451 | | Operating Profit (Loss) | $1,266 | $1,742 | | YoY Change in Operating Profit | -27% | | - North American Industrial Packaging saw lower average sales margins and decreased sales volumes in 2023 due to soft demand and consumer shifts, with input costs significantly lower but operating costs higher due to inflation and economic downtime[231](index=231&type=chunk) - EMEA Industrial Packaging experienced lower average sales margins and sales volumes in 2023, with higher operating costs due to inflation, but significantly lower input costs[233](index=233&type=chunk) Global Cellulose Fibers Performance | Metric | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | Net Sales | $2,890 | $3,227 | | Operating Profit (Loss) | $(17) | $106 | | YoY Change in Operating Profit | -123 million | | - Global Cellulose Fibers experienced lower sales volumes in 2023 due to customer inventory destocking, lower average sales margins, and higher operating/maintenance costs, partially offset by lower input costs[237](index=237&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Cash provided by operations and free cash flow decreased in 2023, but the company maintains a strong liquidity position with investment-grade credit ratings Cash Flow from Operations and Free Cash Flow | Metric | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | Cash provided by operations (including discontinued operations) | $1,833 | $2,174 | | Free Cash Flow | $692 | $1,243 | Capital Spending by Business Segment | Segment | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | Industrial Packaging | $928 | $762 | | Global Cellulose Fibers | $177 | $143 | | Corporate and other | $36 | $26 | | **Total Capital Spending** | **$1,141** | **$931** | - Capital spending for 2024 is expected to be **$800 million to $1.0 billion**, or **78% to 97%** of expected depreciation and amortization[243](index=243&type=chunk)[254](index=254&type=chunk) - Financing activities in 2023 included net debt issuances of **$3 million** and **$218 million** in common stock repurchases and restricted stock withholding taxes[245](index=245&type=chunk)[246](index=246&type=chunk) - The company's liquidity position is strong, supported by **$1.9 billion** in credit facilities (amended in June 2023 to **$1.4 billion** committed bank facility and **$500 million** receivables securitization program) and a **$1.0 billion** commercial paper program[198](index=198&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk) - The company maintains investment-grade credit ratings (**BBB stable by S&P, Baa2 stable by Moody's**) and was in compliance with all debt covenants at December 31, 2023[263](index=263&type=chunk)[504](index=504&type=chunk) Contractual Obligations for Future Payments (as of Dec 31, 2023, in millions) | Obligation Type | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Debt maturities (a) | $138 | $189 | $143 | $333 | $670 | $4,120 | | Operating lease obligations | 171 | 127 | 89 | 60 | 33 | 31 | | Purchase obligations (b) | 2,222 | 847 | 698 | 507 | 363 | 1,863 | | **Total (c)** | **$2,531** | **$1,163** | **$930** | **$900** | **$1,066** | **$6,014** | [Critical Accounting Policies and Significant Accounting Estimates](index=49&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Accounting%20Estimates) Critical accounting policies involve significant management judgment and estimates for contingencies, asset impairment, pensions, and income taxes - Critical accounting policies include contingencies, impairment of long-lived assets and goodwill, pensions, and income taxes, all requiring significant management judgment and estimates[267](index=267&type=chunk)[268](index=268&type=chunk) - Accruals for contingent liabilities (personal injury, product liability, environmental, asbestos) are recorded when probable and reasonably estimable, with environmental liabilities estimated at **$251 million** and asbestos-related claims at **$97 million** (net of insurance) as of December 31, 2023[269](index=269&type=chunk)[270](index=270&type=chunk) - Goodwill impairment tests are performed annually (or more frequently if indicators arise) using a quantitative assessment based on discounted future cash flows, market multiples, and transaction multiples[272](index=272&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk) Pension Benefit Obligations and Discount Rates | Metric | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | U.S. qualified pension benefit obligation | $8,718 | $8,816 | | U.S. qualified pension plan assets | $8,836 | $8,845 | | U.S. qualified pension overfunded balance | $118 | $297 | | Discount rate (U.S. pension obligations) | 5.10% | 5.40% | - The company estimates net pension income of approximately **$7 million** for its U.S. defined benefit plans in 2024, a significant change from **$94 million** expense in 2023[283](index=283&type=chunk)[281](index=281&type=chunk) - Valuation allowances for deferred tax assets were **$848 million** at December 31, 2023, reflecting significant judgment in assessing future taxable income[286](index=286&type=chunk) [Legal Proceedings](index=52&type=section&id=Legal%20Proceedings) Information on environmental and other legal proceedings is detailed in Note 14, with no current proceedings exceeding **$1 million** in sanctions - Information concerning environmental and other legal proceedings is detailed in Note 14, Commitments and Contingent Liabilities[288](index=288&type=chunk) - The company is not subject to any administrative or judicial environmental proceedings likely to result in monetary sanctions of **$1 million** or more[288](index=288&type=chunk) [Recent Accounting Developments](index=53&type=section&id=Recent%20Accounting%20Developments) The company adopted ASU 2022-04 in Q1 2023 and is evaluating new ASUs on Segment Reporting and Income Taxes - The company adopted ASU 2022-04 on Liabilities - Supplier Finance Programs in Q1 2023, requiring disclosure of supplier finance program obligations[290](index=290&type=chunk)[379](index=379&type=chunk) - New ASUs on Segment Reporting (ASU 2023-07) and Income Taxes (ASU 2023-09) are effective for annual periods beginning after December 15, 2023, and December 15, 2024, respectively, and are currently being evaluated for impact[380](index=380&type=chunk)[381](index=381&type=chunk) [Effect of Inflation](index=53&type=section&id=Effect%20of%20Inflation) Inflationary increases in input costs adversely impacted operating results in 2023 and 2022 due to market conditions and supply shortages - Inflationary increases in input costs (energy, wood, recycled fiber, freight, chemicals) adversely impacted operating results in 2023 and 2022[291](index=291&type=chunk) - The effects of inflation have been more significant recently due to general inflationary conditions, labor market conditions, economic activity, consumer behavior, and supply shortages[291](index=291&type=chunk) [Foreign Currency Effects](index=53&type=section&id=Foreign%20Currency%20Effects) Currency movements directly impact financial statements through translation and remeasurement, and indirectly affect competitiveness and pricing - Currency movements directly impact financial statements through translation of international operations and remeasurement of non-functional currency assets/liabilities[292](index=292&type=chunk) - Indirect impacts include changes in competitiveness of imports/exports and local currency pricing of internationally traded products[292](index=292&type=chunk) - A weaker U.S. dollar and stronger local currency are generally beneficial, with the Euro having the most significant impact[292](index=292&type=chunk) [Market Risk](index=53&type=section&id=Market%20Risk) The company uses financial instruments and derivatives to manage interest rate, commodity, and foreign currency risks, assessing potential loss via sensitivity analysis - The company uses financial instruments, including fixed/variable rate debt and derivatives, to manage interest rate, commodity, and foreign currency risks, not for trading purposes[293](index=293&type=chunk) - Market risk is assessed using sensitivity analysis, measuring potential loss from a hypothetical **10%** change in rates or prices[295](index=295&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) This section refers to the preceding discussion on market risk within Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Quantitative and qualitative disclosures about market risk are provided in the preceding discussion within Item 7[301](index=301&type=chunk) [Financial Statements and Supplementary Data](index=55&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA.) This section presents the audited consolidated financial statements, including statements of operations, balance sheet, cash flows, and equity, with management and auditor reports - Management is responsible for the preparation of consolidated financial statements in conformity with U.S. GAAP and believes they fairly present the company's financial position, results of operations, and cash flows[303](index=303&type=chunk) - The company's internal control over financial reporting was assessed as effective as of December 31, 2023, based on COSO criteria[308](index=308&type=chunk) - Deloitte & Touche LLP issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting[316](index=316&type=chunk)[318](index=318&type=chunk)[326](index=326&type=chunk) - A critical audit matter identified was the valuation of Qualified Pension Plan investments whose reported value is determined based on Net Asset Value (NAV), requiring significant auditor judgment[321](index=321&type=chunk)[322](index=322&type=chunk)[324](index=324&type=chunk) [Report of Management on Financial Statements, Internal Control over Financial Reporting and Internal Control Environment and Board of Directors Oversight](index=55&type=section&id=Report%20of%20Management%20on%20Financial%20Statements%2C%20Internal%20Control%20over%20Financial%20Reporting%20and%20Internal%20Control%20Environment%20and%20Board%20of%20Directors%20Oversight) Management affirms responsibility for U.S. GAAP-compliant financial statements and effective internal control over financial reporting, overseen by the Board - Management affirms responsibility for consolidated financial statements prepared in conformity with U.S. GAAP and believes they fairly present the company's financial position, results of operations, and cash flows[303](index=303&type=chunk) - The company's internal control over financial reporting was assessed as effective as of December 31, 2023, based on the COSO framework[308](index=308&type=chunk) - The internal control environment includes an ethics program, a toll-free helpline for reporting violations, and an extensive internal audit program, with Board of Directors oversight through the Audit and Finance Committee[310](index=310&type=chunk)[311](index=311&type=chunk) [Reports of Deloitte & Touche LLP, Independent Registered Public Accounting Firm](index=57&type=section&id=Reports%20of%20Deloitte%20%26%20Touche%20LLP%2C%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on financial statements and internal control, identifying pension plan investment valuation as a critical audit matter - Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements for the three years ended December 31, 2023, and on the effectiveness of internal control over financial reporting as of December 31, 2023[316](index=316&type=chunk)[318](index=318&type=chunk)[326](index=326&type=chunk) - The valuation of Qualified Pension Plan investments based on Net Asset Value (NAV) was identified as a critical audit matter due to the lack of readily determinable value and subjective valuation methodologies[321](index=321&type=chunk)[322](index=322&type=chunk)[324](index=324&type=chunk) [Consolidated Statement of Operations](index=60&type=section&id=Consolidated%20Statement%20of%20Operations) This table presents the company's consolidated statement of operations, detailing net sales, expenses, and net earnings for 2021-2023 Consolidated Statement of Operations (in millions, except per share amounts) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net Sales | $18,916 | $21,161 | $19,363 | | Cost of products sold | 13,629 | 15,143 | 13,832 | | Selling and administrative expenses | 1,360 | 1,293 | 1,385 | | Depreciation, amortization and cost of timber harvested | 1,432 | 1,040 | 1,097 | | Distribution expenses | 1,575 | 1,783 | 1,444 | | Interest expense, net | 231 | 325 | 337 | | Non-operating pension (income) expense | 54 | (192) | (200) | | Earnings (Loss) From Continuing Operations Before Income Taxes And Equity Earnings (Losses) | 382 | 1,511 | 999 | | Income tax provision (benefit) | 59 | (236) | 188 | | Equity earnings (loss), net of taxes | (21) | (6) | 2 | | Earnings (Loss) From Continuing Operations | 302 | 1,741 | 813 | | Discontinued operations, net of taxes | (14) | (237) | 941 | | **Net Earnings (Loss) Attributable to International Paper Company** | **$288** | **$1,504** | **$1,752** | | Diluted Earnings (Loss) Per Share Attributable to International Paper Company Common Shareholders | $0.82 | $4.10 | $4.47 | [Consolidated Statement of Comprehensive Income](index=61&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) This table presents the company's consolidated statement of comprehensive income, including net earnings and other comprehensive income for 2021-2023 Consolidated Statement of Comprehensive Income (Loss) (in millions) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net Earnings (Loss) | $288 | $1,504 | $1,754 | | Other Comprehensive Income (Loss), Net of Tax | 360 | (259) | 901 | | **Comprehensive Income (Loss) Attributable to International Paper Company** | **$648** | **$1,245** | **$2,655** | [Consolidated Balance Sheet](index=62&type=section&id=Consolidated%20Balance%20Sheet) This table presents the company's consolidated balance sheet, detailing assets, liabilities, and equity as of December 31, 2023 and 2022 Consolidated Balance Sheet (in millions) | Asset/Liability | 2023 | 2022 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and temporary investments | $1,113 | $804 | | Total Current Assets | 6,608 | 6,770 | | Plants, Properties and Equipment, net | 10,150 | 10,431 | | Goodwill | 3,041 | 3,041 | | Overfunded Pension Plan Assets | 118 | 297 | | **TOTAL ASSETS** | **$23,261** | **$23,940** | | **LIABILITIES AND EQUITY** | | | | Notes payable and current maturities of long-term debt | $138 | $763 | | Total Current Liabilities | 3,959 | 5,000 | | Long-Term Debt | 5,455 | 4,816 | | Deferred Income Taxes | 1,552 | 1,732 | | Underfunded Pension Benefit Obligation | 280 | 281 | | **Total Equity** | **$8,355** | **$8,497** | | **TOTAL LIABILITIES AND EQUITY** | **$23,261** | **$23,940** | [Consolidated Statement of Cash Flows](index=63&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) This table presents the company's consolidated statement of cash flows, detailing operating, investing, and financing activities for 2021-2023 Consolidated Statement of Cash Flows (in millions) | Activity | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Cash Provided By (Used For) Operating Activities | $1,833 | $2,174 | $2,030 | | Cash Provided By (Used For) Investment Activities | $(668) | $(608) | $6,054 | | Cash Provided By (Used For) Financing Activities | $(866) | $(2,054) | $(7,375) | | Change in Cash and Temporary Investments | $309 | $(491) | $700 | | Cash and Temporary Investments, End of the period | $1,113 | $804 | $1,295 | [Consolidated Statement of Changes in Equity](index=64&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) This table presents the company's consolidated statement of changes in equity, detailing movements in shareholder equity for 2021-2023 Consolidated Statement of Changes in Equity (in millions) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Balance, January 1 | $8,497 | $9,082 | $7,854 | | Issuance of stock for various plans, net | $82 | $132 | $143 | | Repurchase of stock | $(220) | $(1,284) | $(839) | | Dividends paid | $(652) | $(678) | $(793) | | Comprehensive income (loss) | $648 | $1,245 | $2,655 | | **Balance, December 31** | **$8,355** | **$8,497** | **$9,082** | [Notes to Consolidated Financial Statements](index=65&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes to the consolidated financial statements, covering significant accounting policies and specific financial accounts [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=93&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE.) There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[576](index=576&type=chunk) [Controls and Procedures](index=93&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES.) As of December 31, 2023, disclosure controls and procedures were effective, with no material changes in internal control during Q4 2023 - The company's disclosure controls and procedures were effective as of December 31, 2023[577](index=577&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended December 31, 2023[578](index=578&type=chunk) [Other Information](index=93&type=section&id=ITEM%209B.%20OTHER%20INFORMATION.) Ms. Kathryn D. Sullivan adopted a Rule 10b5-1 Trading Plan in November 2023 to sell up to **12,000** common shares - Ms. Kathryn D. Sullivan, a Board member, adopted a Rule 10b5-1 Trading Plan on November 14, 2023, to sell up to **12,000** common shares from February to November 2024[580](index=580&type=chunk) - No other director or Section 16 officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q4 2023[581](index=581&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=93&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS.) There are no disclosures regarding foreign jurisdictions that prevent inspections - No disclosures regarding foreign jurisdictions that prevent inspections[582](index=582&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=94&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE.) Information on directors, executive officers, and corporate governance is incorporated by reference from the definitive proxy statement, including the Code of Conduct - Information concerning directors, executive officers, and corporate governance is incorporated by reference to the definitive proxy statement[584](index=584&type=chunk) - The company's Code of Conduct applies to all employees, including the CEO and senior financial officers, as well as the Board of Directors[585](index=585&type=chunk) - Amendments to the Code and any waivers granted to directors, CEO, and senior financial officers are disclosed on the company's website[585](index=585&type=chunk) [Executive Compensation](index=94&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION.) Information regarding executive compensation is incorporated by reference from the definitive proxy statement - Information on executive compensation is incorporated by reference to the definitive proxy statement[588](index=588&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=94&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS.) Details on security ownership of certain beneficial owners and management, and equity compensation plan information, are incorporated by reference - A description of security ownership of certain beneficial owners and management and equity compensation plan information is incorporated by reference to the definitive proxy statement[589](index=589&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=94&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE.) Information concerning certain relationships, related transactions, and director independence matters is incorporated by reference from the definitive proxy statement - Information on certain relationships, related transactions, and director independence matters is incorporated by reference to the definitive proxy statement[590](index=590&type=chunk) [Principal Accountant Fees and Services](index=94&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES.) Information regarding fees paid to and services rendered by the independent registered public accounting firm, and pre-approval policies, is incorporated by reference - Information on fees paid to and services rendered by the independent registered public accounting firm, and pre-approval policies, is incorporated by reference to the definitive proxy statement[591](index=591&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=95&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES.) This section lists all exhibits and financial statement schedules filed as part of the 10-K report, including transaction agreements and additional financial data - This item includes a list of exhibits and financial statement schedules, such as transaction agreements, corporate governance documents, debt instruments, and incentive compensation plans[595](index=595&type=chunk)[596](index=596&type=chunk)[598](index=598&type=chunk)[600](index=600&type=chunk)[602](index=602&type=chunk)[605](index=605&type=chunk) - Additional financial data for 2023, 2022, and 2021 is provided, to be read in conjunction with the consolidated financial statements[594](index=594&type=chunk)[595](index=595&type=chunk) [Form 10-K Summary](index=110&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[604](index=604&type=chunk) [Signatures](index=111&type=section&id=SIGNATURES.) The report is duly signed by key executives and directors of International Paper Company as of February 16, 2024 - The report is signed by Joseph R. Saab, Senior Vice President, General Counsel and Corporate Secretary, on February 16, 2024[607](index=607&type=chunk) - Mark S. Sutton, Chairman of the Board & Chief Executive Officer, and other directors and financial officers also signed the report on February 16, 2024[608](index=608&type=chunk)[609](index=609&type=chunk) [Appendix I 2023 Listing of Facilities](index=113&type=section&id=APPENDIX%20I%202023%20LISTING%20OF%20FACILITIES.) Appendix I provides a detailed listing of International Paper's production facilities by segment and geographic location, noting recent closures - Appendix I lists all production facilities for Industrial Packaging (Containerboard, Corrugated Packaging, Recycling, Bags), Global Cellulose Fibers (Pulp), and Distribution[611](index=611&type=chunk)[612](index=612&type=chunk) - The listing specifies facilities in the U.S., International (Mexico, Morocco, Spain, Chile, France, Italy, Canada, Poland), and Asia (China, Japan, Korea, Singapore)[611](index=611&type=chunk)[612](index=612&type=chunk) - Notes indicate the Orange, Texas mill was closed in December 2023, and one corrugated packaging location in Illinois was closed in January 2023[612](index=612&type=chunk) [Appendix II 2023 Capacity Information](index=115&type=section&id=APPENDIX%20II%202023%20CAPACITY%20INFORMATION.) Appendix II details International Paper's 2023 production capacity by segment and geographic area, including containerboard and dried pulp, with notes on recent closures 2023 Capacity Information (in thousands of short tons except as noted) | Segment | U.S. | EMEA | Americas, other than U.S. | Total | | :--- | :--- | :--- | :--- | :--- | | Industrial Packaging (a) Containerboard | 13,829 | 560 | 27 | 14,416 | | Global Cellulose Fibers (b) Dried Pulp (in thousands of metric tons) | 2,749 | — | 373 | 3,122 | - U.S. containerboard capacity includes the Orange, Texas mill, which was permanently closed in December 2023[613](index=613&type=chunk) - U.S. dried pulp capacity includes pulp machines at Riegelwood, North Carolina, and Pensacola, Florida mills, which were permanently shut down in December 2023 and August 2023, respectively[614](index=614&type=chunk)

Fourth Quarter & Full-Year 2023 Earnings 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. Forward-looking 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,” “confident,” ...

Financial Data and Key Metrics Changes - In 2023, the company faced a challenging market environment, resulting in lower revenues and earnings compared to prior periods due to reduced demand and declining sales prices [6][7] - Operating earnings per share for Q4 2023 was $0.41, down from $0.64 in Q3 2023, primarily due to lower price and mix [9][10] - Free cash flow for the year included a one-time cash use of approximately $200 million related to timber monetization actions [7] Business Line Data and Key Metrics Changes - In the Industrial Packaging segment, price and mix were lower due to index movements and lower export prices, but volume was higher despite one less shipping day [11][12] - The Global Cellulose Fibers segment saw lower price and mix due to index movements, with volume remaining flat overall as higher demand for fluff and specialty pulp was offset by lower sales of commodity grades [17][18] Market Data and Key Metrics Changes - U.S. box shipments in Q4 2023 were up approximately 3% sequentially, indicating a recovery in demand since the trough in March 2023 [13] - Demand for kraft containerboard improved through Q4, with inventories normalizing across all regions [16] Company Strategy and Development Direction - The company is focused on improving profitability across its portfolio, with strategies in place to enhance margins and align with customer needs [5][20] - The go-to-market strategy emphasizes value over volume, aiming to improve margins and mix by investing in capabilities [25][26] Management's Comments on Operating Environment and Future Outlook - Management expects continued demand recovery across markets in 2024, with a projected growth of approximately 3% in packaging and fluff pulp markets [19][20] - The first quarter of 2024 is anticipated to be an earnings trough due to seasonally low volumes and higher costs [19][23] Other Important Information - The company returned approximately $840 million to shareholders in 2023 and remains committed to its dividend [32] - Capital investments between $800 million and $1 billion are planned for general maintenance and enhanced capabilities in the box business [21] Q&A Session Summary Question: Is much of the value over volume strategy locked up contractually? - Management indicated that the strategy is holistic and involves improving customer relationships and articulating value, rather than simply walking away from lower-margin business [36][37] Question: Can the $68 million tailwind for Q1 be annualized? - Management confirmed that annualizing the $68 million impact is reasonable, but emphasized that customer relationships and contract timing vary [40][41] Question: What is the outlook for EBITDA and free cash flow in 2024? - Management refrained from providing specific guidance due to numerous variables but expressed confidence in earnings and cash flow [44] Question: How did the January freeze impact shipments? - The January freeze had a significant impact, but management believes it will not affect forecasts for Q1 [78] Question: What percentage of contracts have been renegotiated? - Approximately one-third of contracts have not been renegotiated, with ongoing discussions about value and pricing [61]