International Paper Company · NYSE:IP
International Paper — Q3 2024 Earnings Presentation
29 slides from International Paper's earnings presentation, Oct 31, 2024
Slide 1: Third Quarter 2024 Earnings
Third Quarter 2024 Earnings October 31, 2024
Slide 2: Forward-Looking Statements
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. Forward- looking statements can be identified by the use of forw
Slide 3: Driving Transformational Performance at IP
Driving Transformational Performance at IP Through great teams with an 80/20 mindset, we deliver profitable market share growth as the low-cost producer by providing North American and EMEA customers the most reliable & innovative sustainable packaging solutions. Third Quarter 2024 Earnings 10/31/20
Slide 4: Developing Action Plans and Entering Implementation Phase
Developing Action Plans and Entering Implementation Phase 80/20 Approach 1) Simplify 2) Segment 3) Resource 4) Grow ✓ Analytics ✓ Brave on Paper ✓ Zero up, Resource & Alignment Plans Implementation & Renewal April 2024 Today 2025 and beyond Third Quarter 2024 Earnings 10/31/2024 4
Slide 5: Actions Taken to Strengthen IP and Drive Better Performance
Actions Taken to Strengthen IP and Drive Better Performance Enterprise NA Packaging Solutions Global Cellulose Fibers Resource Alignment Box System Optimization Exploring Strategic Options ✓ Zero-up approach ✓ Investing in service, reliability for GCF business ✓ Public company requirement & producti
Slide 6: Early 80/20 Wins Across the Company
Early 80/20 Wins 20% to Across the Company 30% est. productivity improvement Regional Pilot Corp Plants Exited GCF Reorg commodity Completed products and $25 assets Safety million above all else in sourcing savings Aligned identified Eliminated Sales non-value- Incentive added internal Programs repo
Slide 7: Next Steps
Next Steps ▪ Accelerate 80/20 strategy ▪ Preparing for DS Smith integration o Regulatory process underway o Expect transaction to close early 1Q25 ▪ Investor Day – March 25, 2025 Third Quarter 2024 Earnings 10/31/2024 7
Slide 8: Performance & Outlook
Performance & Outlook Third Quarter 2024 Earnings 10/31/2024 8
Slide 9: Third Quarter 2024 Highlights
Third Quarter 2024 Highlights 3Q24 Performance 3Q23 2Q24 3Q24 • Earnings & margins lower sequentially and YoY, Sales ($B) $4.6 $4.7 $4.7 primarily from higher costs Adjusted EBIT ($MM) 1 $332 $300 $233 • Higher sales prices across the portfolio 2 • Lower volume as anticipated due to seasonality Adju
Slide 10: 3Q24 vs 2Q24 Adjusted Operating EPS
3Q24 vs 2Q24 Adjusted Operating EPS1 1 .29 (.12) 0.9 0.8 (.28) 0.7 .55 0.6 (.03) .08 .44 0.5 (.05) 0.4 0.3 0.2 0.1 0 2Q'24 Price/Mix Volume Operations Maintenance Input Costs Corporate 3Q'24 & Costs Outages & Other Items Third Quarter 2024 Earnings 10/31/2024 10
Slide 11: Industrial Packaging 3Q24 vs 2Q24 Adjusted EBIT
Industrial Packaging 3Q24 vs 2Q24 Adjusted EBIT1 105 (48) Prices increased in all channels: (89) $70MM Index movement $17MM Box Go-to-Market strategy $18MM Exports 291 (38) Seasonally softer volume plus one less shipping day vs. 2Q (24) 197 Demand trends moderately improving IP U.S. box shipments -9
Slide 12: Global Cellulose Fibers 3Q24 vs 2Q24 Adjusted EBIT
Global Cellulose Fibers 3Q24 vs 2Q24 Adjusted EBIT1 24 (4) (35) Higher price from index movement 24 0 40 Higher fluff volume, offset by reduction in commodity pulp 31 Ops & Costs impacted by mill reliability incidents, employee incentive comp., and timing $ Million Seasonally lower planned maintenan
Slide 13: Fourth Quarter Earnings Outlook
Fourth Quarter Earnings Outlook* Changes from 3Q24 Industrial Packaging Cellulose Fibers Price & Mix Prior index movement (+) Prior index movement (-) EMEA mix (+) Volume N.A. 2 less days (-) Stable Seasonality (+) Improved performance (+) Improved performance (+) Ops & Costs Seasonality and non rep
Slide 14: Building a Performance-Driven Culture with an 80/20 Mindset
Building a Performance-Driven Culture with an 80/20 Mindset EBITDA1 Profitable Growth $4B Focus on People, Customers & Products where we win $2.2B Simplify, align resources and reduce cost structure Invest for reliability, productivity and innovation 2023 Medium Price to value Term All EBITDA reflec
Slide 15: Appendix & Footnotes
Appendix & Footnotes Third Quarter 2024 Earnings 10/31/2024 15
Slide 16: Investor Relations and Media Contacts
Investor Relations • Mark Nellessen +1-901-419-1731 mark.nellessen@ipaper.com • Michele Vargas +1-901-419-7287 michele.vargas@ipaper.com Media • Amy Simpson +1-901-419-4964 amy.simpson@ipaper.com Third Quarter 2024 Earnings 10/31/2024 16
Slide 17: Strategic Actions Impact
Strategic Actions Impact ~75% of benefits expected in 2025 Enterprise NA Packaging Global Cellulose Fibers Total Resource Alignment (a) 5 Plant Closures in ‘24 Georgetown Mill Closure Full Year Estimates $ Million ’24F ’25F ’26F ’24F ’25F ’26F ’24F ’25F ’26F Cumulative Run Rate Adjusted EBITDA Benef
Slide 18: Select Financial Metrics
Select Financial Metrics 1 5-Year Average $1.8 $ Million 2022 2023 2024F Maintenance Outage Expense $601 $593 $531 Maintenance & Regulatory $649 $815 Capex Targeting Cost Reduction $50 $85 $800 - $1,000 Strategic $232 $241 Depreciation & Amortization2 $1,040 $1,432 $1,300 Net Interest Expense3 $267
Slide 19: 3Q24 vs 3Q23 Adjusted Operating EPS
3Q24 vs 3Q23 Adjusted Operating EPS1 1.4 .56 (.08) (.61) 1.2 1 0.8 .64 0.6 (.06) (.08) .07 .44 0.4 0.2 0 3Q'23 Price/Mix Volume Operations Maintenance Input Costs Corporate 3Q'24 & Costs Outages & Other Items Third Quarter 2024 Earnings 10/31/2024 19
Slide 20: Industrial Packaging 3Q24 vs 3Q23 Adjusted EBIT
Industrial Packaging 3Q24 vs 3Q23 Adjusted EBIT1 600 200 (34) (211) 500 400 325 $ Million (45) 300 (38) Ops & Costs YoY change ~55% represents employee incentive comp 197 200 based on company performance (performance above target 2024 YTD) ~20% represents general and wage inflation 100 0 3Q'23 Price
Slide 21: Global Cellulose Fiber 3Q24 vs 3Q23 Adjusted EBIT
Global Cellulose Fiber 3Q24 vs 3Q23 Adjusted EBIT1 37 (1) (47) 6 40 $ Million 18 27 Ops & Costs YoY change ~40% represents employee incentive comp based on company performance (performance above target 2024 YTD) ~20% represents general and wage inflation 3Q'23 Price/Mix Volume Operations Maintenance
Slide 22: Geographic Business Segment Operating Results
Geographic Business Segment Operating Results Quarterly Business Segment Sales D&A 1 $ Million Operating Profit 3Q23 2Q24 3Q24 3Q24 3Q23 2Q24 3Q24 North America $3,491 $3,628 $3,640 $192 $313 $281 $190 EMEA $316 $328 $322 $16 $12 $10 $7 Global Cellulose Fibers Global Cellulose Fibers $725 $717 $710
Slide 23: Maintenance Outages Expenses
Maintenance Outages Expenses 2024 Forecast $ Million 1Q24A 2Q24A 3Q24A 4Q24F 2024F Industrial Packaging $77 $80 $118 $97 $372 North America $77 $59 $118 $94 $348 Riverdale Papers - $18 - $1 $19 EMEA - $3 - $2 $5 Global Cellulose Fibers $57 $38 $14 $50 $159 North America $33 $38 $14 $50 $135 Georgeto
Slide 24: 2024 Operating Earnings
2024 Operating Earnings Non- Equity Average Pre-Tax Tax controlling Net Income Earnings Shares Diluted EPS1 $MM $MM Interest $MM $MM MM $MM Net Earnings from Continuing Operations 1Q24 $85 $(27) - $(2) $56 349 $0.16 2Q24 $206 $293 - $(1) $498 353 $1.41 3Q24 $80 $71 - $(1) $150 353 $0.42 Net Special
Slide 25: Sales Volume by Product
Sales Volume by Product (a) Preliminary and Unaudited Three Months Ended Three Months Nine Months Ended September 30, Ended June 30, September 30, 2024 2023 2024 2024 2023 Industrial Packaging (In thousands of short tons) Corrugated Packaging (b) 2,192 2,329 2,255 6,679 7,103 Containerboard 772 677
Slide 26: North America Downtime
North America Downtime Containerboard Cellulose Fibers Thousand Tons Thousand Tons 622 532 421 130 105 398 458 143 137 243 138 36 132 231 68 12 179 55 61 11 120 113 102 106 102 132 36 35 12 75 57 19 25 24 14 Economic Maintenance Third Quarter 2024 Earnings 10/31/2024 26
Slide 27: Global Input Costs 3Q24 vs 2Q24
Global Input Costs 3Q24 vs 2Q24 $24MM Unfavorable, $(0.05) per share By Business By Input Type U.S Average Cost vs 2Q24 - Wood 2% 2 OCC -1% (8) Wood (1) Natural Gas 2% (10) Electricity 9% OCC (1) Chemical Composite 1% (24) (4) (2) Industrial Global Cellulose Fibers Fiber Energy Chemicals Freight Pac
Slide 28: Footnotes
Footnotes Slide 5 1 The Company is unable to provide a reconciliation of this anticipated Adjusted EBITDA benefit, a forward-looking non-GAAP financial measure, on a fiscal year run rate basis associated with the actions described on this slide, as presented, without unreasonable efforts. This is du
Slide 29: Footnotes
Footnotes Slide 17 1 The Company is unable to provide reconciliations of these anticipated Adjusted EBITDA benefits, which are forward-looking non-GAAP financial measures, as presented on this slide, without unreasonable efforts. This is due to the inherent difficulty in forecasting generally and qu
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