International Paper Reports First Quarter 2024 Results

"International Paper made progress executing our strategic initiatives in the first quarter. We saw commercial benefits from our business strategies, as well as cost benefits from mill system optimization." – Mark Sutton, Chairman and CEO of International Paper.

April 25, 2024 - International Paper (NYSE: IP) today reported first quarter 2024 financial results.

FIRST QUARTER 2024 HIGHLIGHTS

• First quarter net earnings of $56 million ($0.16 per diluted share)
• First quarter adjusted operating earnings (non-GAAP) of $61 million ($0.17 per diluted share)
• First quarter results negatively impacted by approximately $52 million (pre-tax) due to January freeze and Ixtac, Mexico fire
• First quarter cash provided by operations of $395 million and returned $161 million to shareholders in dividends

"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 remain elevated and volumes were seasonally lower in the quarter, market trends continue to improve."

"Looking ahead," Sutton added, "International Paper is well positioned for its next chapter as Andy Silvernail steps into the CEO role on May 1. I am confident that his leadership experience and proven track record, paired with the industry expertise of our senior leadership team, will amplify the company's success going forward. On a personal note, it has been a privilege to be part of the IP team for the past 40 years and an honor to lead the company for the past decade."

SEGMENT INFORMATION

First quarter 2024 net sales by business segment and operating profit (loss) by business segment compared with the fourth quarter of 2023 and the first quarter of 2023 are as follows:

Industrial Packaging operating profits (losses) in the first quarter of 2024 were $216 million compared with $315 million in the fourth quarter of 2023. In North America, earnings benefited from higher sales prices for boxes reflecting the benefits of our commercial efforts and higher sales prices for containerboard. These benefits were more than offset by seasonally lower volumes, higher planned outage costs and higher input costs, primarily for recovered fiber.

Additionally, operating costs were higher including the impact of the winter freeze and Ixtac, Mexico fire.

Economic downtime was lower, reflecting the impact of mill strategic actions taken in the fourth quarter of 2023.

In EMEA, earnings were lower, as the benefits of lower operating costs and lower planned maintenance outage costs were more than offset by the non-repeat of an energy subsidy and other favorable one-time items in the fourth quarter of 2023.

Global Cellulose Fibers operating profits (losses) in the first quarter of 2024 were $(47) million compared with $(58) million in the fourth quarter of 2023. Regional demand for absorbent fluff products is improving in mature economies while demand is generally stable in the developing economies. Higher pulp pricing, improved product mix and lower planned outage costs were partially offset by higher operating costs.

Economic downtime was lower, reflecting the impact of the mill strategic actions taken in the second half of 2023. Input costs were higher, primarily for energy.

Visit www.internationalpaper.com/investors for International Paper's complete first quarter 2024 report.

ANNOUNCED ACQUISITION

On April 16, 2024, the Company issued an announcement pursuant to Rule 2.7 of the City Code on Takeovers and Mergers, disclosing the terms of a recommended offer by the Company to acquire the entire issued and to be issued share capital of DS Smith Plc, a public limited company incorporated in England and Wales ("DS Smith"), in an all-stock transaction (the "Business Combination").

Under the terms of the Business Combination, each DS Smith share will be valued at 415 pence per share based on the Company's closing share price of $40.85 and GBP/USD exchange rate of 1.2645 on March 25, 2024, being the close of business on the last day prior to the announcement by DS Smith of a previously disclosed possible offer by the Company. This will result in IP issuing 0.1285 shares for each DS Smith share, resulting in pro forma ownership of 66.3% for IP shareholders and 33.7% for DS Smith shareholders, with an implied enterprise value of approximately $9.9 billion. Costs related to the transaction were $5 million for the three months ended March 31, 2024.

In connection with the Business Combination, the Company also intends to seek a secondary listing of the International Paper common stock ("Common Stock") on the London Stock Exchange. Following completion of the Business Combination, Memphis, Tennessee will be the headquarters of the combined company, with plans to establish a Europe, Middle East and Africa (EMEA) headquarters at DS Smith's existing London headquarters.

Upon the closing of the Business Combination, it is intended that the Company's board of directors will form the board of directors of the combined company, and that up to two directors of DS Smith will be invited to join the board of directors of the combined company. Mr. Andrew K. Silvernail will be the Chief Executive Officer of the combined company.

The transaction is expected to close during the fourth quarter of 2024, subject to the approval of IP shareholders and DS Smith shareholders, as well as customary closing conditions, including regulatory clearances in Europe and the U.S.

International Paper is a global producer of sustainable packaging, pulp and other fiber-based products, and one of the world's largest recyclers. Headquartered in Memphis, Tennessee, IP employs approximately 39,000 colleagues globally. The company serves customers worldwide, with manufacturing operations in North America, Latin America, North Africa and Europe. Net sales for 2023 were $18.9 billion.

SOURCE: International Paper