International Paper Company · NYSE:IP
International Paper — International Paper Co /New/ — Merger or Acquisition (June 2011)
26 slides from International Paper's merger presentation, Jun 7, 2011
Slide 1: Building on the Future
Building on the Future June 6, 2011 Building on the Future June 6, 2011 Exhibit 99.2
Slide 2: Statements Relating to Non-GAAP Financial Measures
Statements Relating to Non-GAAP Financial Measures Statements Relating to Non-GAAP Financial Measures During the course of this presentation, certain non-U.S. GAAP financial information will be presented. A reconciliation of those numbers to U.S. GAAP financial measures is available on the company’s
Slide 3: The Temple-Inland Opportunity
Building on the Future The Temple-Inland Opportunity Consistent with IP’s transformation plan and focus on achieving and sustaining cost of capital returns Makes a very good business an excellent one - Compelling strategic and industrial logic - Shared focus on low-cost mills; complementary converti
Slide 4: Transformation to the "New IP" 2006-2011
Transformation to the “New IP” 2006-2011 What We’ve Done What We’re Doing • Exited non-strategic businesses • Reduced structural capacity & fixed costs • Significant reduction of overhead costs • Industry-leading margins • Increased dividend to a sustainable level • Generate strong, sustainable FCF
Slide 5: Transformation Accomplishments
Transformation Accomplishments Transformation Accomplishments Significant improvement in margins Replaced land sales earnings by strengthening core businesses Achieved Cost of Capital returns Balanced Use of Cash - Cash to Shareholders - $1.05 dividend, $460MM (~30% FCF) - Reinvestment in Base Busin
Slide 6: Streamlined Business Portfolio
Streamlined Business Portfolio Improved Positions in more Profitable Segments Segment Position #1 #2 #1 #4 Exited Exited Exited Exited Exited Exited Streamlined Business Portfolio Improved Positions in more Profitable Segments Market Segment U.S. Industrial Packaging #3 U.S. Uncoated Papers #1 U.S.
Slide 7: INTERNATIONAL @) >APER
INTERNATIONAL @) >APER $2,500 $2,000 $1,500 a wt Holl alee 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Slide 8: Improving Returns on Invested Capital
Improving Returns on Invested Capital Transformation Driving ROI Improving Returns on Invested Capital Transformation Driving ROI
Slide 9: Significantly Improved EBITDA Margins
1H10 Margin Significantly Improved EBITDA Margins 12% 17% 14% 24% 22% 11% Significantly Improved EBITDA Margins
Slide 10: Step Change in Level of Performance Post-WY PKG Acquisition
Step Change in Level of Performance Post-WY PKG Acquisition Step Change in Level of Performance Post-WY PKG Acquisition Post-WY PKG Note: Corporate allocations for 2000 – 2004 held constant at 2005 allocation level, EBITDA % margins calculated per external reporting with trades included in revenue.
Slide 11: Demonstrated Ability to Deliver Synergies
Demonstrated Ability to Deliver Synergies Demonstrated Ability to Deliver Synergies Synergies generated from the WY PKG acquisition have exceeded expectations Targeted $400MM of synergies on a sales base of $5.2B Generated over $500MM of run rate synergies ahead of plan Synergies strongly contribute
Slide 12: Strengthening North American Industrial Packaging
Strengthening North American Industrial Packaging ($ Billion) North American Industrial Packaging Strengthening North American Industrial Packaging Pre-WY PKG 3Q’10-1Q’11 Annualized Sales $3.9 $8.6 EBITDA (before special items) $0.5 $1.6 EBITDA Margin IPG = 13% Comp. A = 20% Comp. B = 11% Comp. C =
Slide 13: Strengthening International Paper
Strengthening International Paper ($ Billion, except per share) IP Total Excl. Forest Products Strengthening International Paper Pre-WY PKG 3Q’10-1Q’11 Annualized Sales $21.4 $25.9 EBITDA (before special items) $2.3 $3.7 EBITDA Margin 11% 14% Free Cash Flow (Includes special items; excludes pension
Slide 14: Current State Summary
Current State Summary Current State Summary Focused Business Portfolio Higher, More Sustainable Earnings Reduced Costs Reduced Debt Increased Earnings, Free Cash Flow & Returns Commitment to Balanced use of Cash to Generate Increased Shareholder Value
Slide 15: Offer to Acquire Temple-Inland: Transaction Highlights
Offer to Acquire Temple-Inland Transaction Highlights Offer to Acquire Temple-Inland Transaction Highlights Consideration All-cash offer for all TIN shares at $30.60 per share Premium Premium of 44% to TIN price as of noon, 6 June 2011 ($21.21) Accretion Substantially accretive to IP EPS in first ye
Slide 16: Financing Overview
Financing Overview Financing Overview
Slide 17: Synergy Opportunities
Synergy Opportunities Synergy Opportunities S G & A Business Overhead Reduction Corporate Overhead Reduction Mills Machine / Product Optimization Efficiency Improvements Market Access Mix Improvement Supply Chain Freight Optimization Purchasing Box Plants System Streamlining
Slide 18: Temple-Inland at a Glance
Temple-Inland at a Glance Predominately a Corrugated Packaging Company 2011 Sales¹ of $4 Billion 2011 EBITDA¹ of $510 Million 4 Million Tons of Containerboard Capacity 7 Containerboard Mills 59 Box Plants 14 Building Products Plants Corrugated 82% Building Products 18% 2010 Segment Assets Temple-Inl
Slide 19: N. A. Industrial Packaging Producer Positions
N. A. Industrial Packaging Producer Positions IP 12% GP 11% TIN 10% PCA 6% IP 27% GP 11% TIN 10% IP 37% GP 11% N. A. Industrial Packaging Producer Positions Source: RISI N.A. Paper Packaging Capacity Reports, SEC filings, IP analysis, RKT/ SSCC announcements to public in Post RKT / SSCC Acquisition
Slide 20: External Environment
External Environment External Environment U.S. economy is recovering U.S. box demand grew 3% in 2010 and is expected to grow with the economy Strong demand for containerboard exports U.S. supply and demand balanced
Slide 21: 2011 - Demand Still Recovering
2011 - Demand Still Recovering 2011 - Demand Still Recovering Source: Fibre Box Association 2011 Q1 Run Rate U.S. Box Shipments
Slide 22: Acquisition Assessment
Acquisition Assessment Acquisition Assessment Creates Shareholder Value Consistent with Strategy Improves Core Business Cost of Capital Returns Significant Synergies Greater Cash Flow Generation Low Integration Risk
Slide 23: The 'New IP'
The ‘New IP’ Repositioned and well positioned North America 75% The ‘New IP’ Repositioned and well positioned IP + TIN EBITDA¹ Combined (IP + TIN) 2010 EBITDA excluding special items Rest of World 25% North America Stronger free cash flow Leading core segment positions ROI greater than cost of capit
Slide 24: Earnings Growth Horizon
Earnings Growth Horizon Temple-Inland “an investment for today” Asia India Eastern Europe Brazil North America Russia Western Europe TIME Today 2011-2012 Near Term Next 3-5 Years Medium Term Next 5+ Years Earnings Growth Horizon Temple-Inland “an investment for today”
Slide 25: Path Forward
Path Forward Path Forward IP Board of Directors is serious and committed Given TIN’s Board outright rejection and lack of interest to engage, IP has decided to take the offer directly to shareholders A negotiated transaction represents the best path forward for all shareholders All reasonable option
Slide 26: Acquisition Summary
Acquisition Summary Acquisition Summary Consistent with strategy Financially attractive - Accretive in year one - Returns exceed cost of capital Strengthens IP’s portfolio Makes a good Industrial Packaging business an excellent one Significant synergy opportunities Creates shareholder value
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