INTERNATIONAL PAPER CO /NEW/ Q1 FY2025 earnings call

• Deployed 80/20 approach to drive transformational change, focusing on serving 80 customers and driving profitable growth. - Made investments to improve service, reliability, and grow in attractive markets. - Integrated DS Smith colleagues and are working on synergies. - Targeting $1.9 billion of cost out after inflation by end of 2027 and $1.1 billion of commercial improvement benefits by end of 2027. - Launched 80/20 performance system in North America and Europe, rolling out to box plants and mill system. - Committed to customer-centric culture and leveraging DS Smith's capabilities.

Packaging Solutions North America: First quarter results reflected higher sales and earnings due to DS Smith acquisition, sales price increases, transformation initiatives, and favorable non-recurring items. Adjusted EBITDA was boosted by these factors. Packaging Solutions EMEA: Benefited from two months of former DS Smith European legacy business and energy incentives from energy efficiency projects. Global Cellulose Fiber: Generated strong adjusted EBITDA but the strategic option process for the business is ongoing with interested parties in due diligence.

• If demand remains stable, confident of landing between $3.5 billion and $4 billion in EBITDA. - If economic environment deteriorates, likely to fall below range and would take countermeasures. - If economic environment improves, feel good about upper end of earnings target. - Second quarter expected to have flat adjusted EBITDA and higher earnings per share sequentially, with plan maintenance outages and non-recurring items affecting results.

• Economic uncertainty and volatility affecting demand. - Potential impact of tariffs on Global Cellulose Fiber business, with mid-single digits risk to topline. - Soft market demand in certain regions affecting performance. - Uncertainty around consumer and business sentiment impacting market outlook.

Q: Please go ahead and reiterate the full year EBITDA guide and demand assumptions.

A: If demand stays, confident of landing between $3.5 billion and $4 billion. If there's meaningful weakness, it would stretch, and if economy improves, feel good about upper end.

Q: What about share gains in North American market position with local 80s?

A: There's been progress in local small to medium-sized customers, with on-time delivery improved and Net Promoter Score better, but progress is modest.

Q: How about operating rate in North America and portfolio assessment?

A: April has seen stability, and a weakening demand curve allows for pulling forward some footprint optimization efforts but strategy remains focused.

Q: Talk about price improvement in Europe and time spent on teams and 80/20 deployment?

A: First price increase expected to hold, second price increase is more uncertain. Spending time on building teams and deploying 80/20, with focus on North American and EMEA teams.

Q: On DS Smith in Europe and sequential downtick, and controlling what can and can't be controlled?

A: Sequential downtick is due to timing of legacy results. Focus is on controlling own destiny by accelerating cost out and focusing on commercial excellence, with confidence in closing market share gap in North America while adapting to market changes