International Paper Reports Second Quarter 2025 Results

MEMPHIS, Tenn. - July 31, 2025 - International Paper (NYSE: IP; LSE: IPC) (the "Company") today reported second quarter 2025 net earnings (loss) of $75 million, or $0.14 per diluted share, and adjusted operating earnings (non-GAAP) of $105 million, or $0.20 per diluted share. Second quarter 2025 net sales were $6.8 billion.

"I'm pleased to see our teams gaining momentum as we advance our transformation journey," said Chief Executive Officer Andy Silvernail. "Our second quarter results reflect a full quarter of our combined International Paper and DS Smith packaging businesses, as we effectively implement 80/20 strategies. In Packaging Solutions North America, our commercial efforts are driving increased revenue, and we experienced seasonally higher volumes and a stable demand environment. However, margins slipped as we continue to face cost headwinds, and we executed a heavy outage schedule. In Europe, demand remained soft and there was a significant increase in depreciation and amortization expense resulting from our acquisition. Overall, we have exceeded our expectations on commercial actions and are on target to achieve cost-out actions before the end of year."

"Looking ahead," Silvernail added, "we expect stronger global revenue and earnings in the third quarter, with confirmed strategic wins across our packaging businesses, continued progress on cost-out initiatives, and fewer planned maintenance outages. We remain focused on securing an advantaged cost position, delivering superior customer experience, and maintaining a high relative supply position as we continue our transformation into a differentiated and sustainable global packaging company."

Diluted Net EPS and Adjusted Operating EPS

						Second Quarter 2025						First Quarter 2025						Second Quarter 2024
Net Earnings (Loss) Per Share						$	0.14					$	(0.24)					$	1.41
Add Back - Non-Operating Pension Expense (Income)						-						0.01						(0.02)
Add Back - Net Special Items Expense (Income)						0.06						0.57						0.14
Income Taxes - Non-Operating Pension and Special Items						-						(0.11)						(0.98)
Adjusted Operating Earnings Per Share*						$	0.20					$	0.23					$	0.55

Select Financial Measures

(In millions)						Second Quarter 2025						First Quarter 2025						Second Quarter 2024
Net Sales						$	6,767					$	5,901					$	4,734
Net Earnings (Loss)						75						(105)						498
Adjusted Operating Earnings*						105						101						193
Cash Provided By (Used For) Operations						476						(288)						365
Free Cash Flow**						54						(618)						167

* Adjusted operating earnings and adjusted operating earnings per share are non-GAAP financial measures defined as net earnings (loss) (a GAAP measure) excluding net special items and non-operating pension expense (income). Net earnings (loss) and diluted earnings (loss) per share are the most directly comparable GAAP measures. The Company calculates adjusted operating earnings (non-GAAP) by excluding the after-tax effect of non-operating pension expense (income) and net special items from the earnings (loss) reported under U.S. GAAP. Adjusted operating earnings per share is calculated by dividing adjusted operating earnings by the diluted average shares of common stock outstanding. Management uses these measures to focus on on-going operations, and believes that such measures are useful to investors in assessing the operational performance of the Company and enabling investors to perform meaningful comparisons of past and present consolidated operating results from continuing operations. For discussion of net special items and non-operating pension expense (income), see the disclosure under Effects of Net Special Items and Consolidated Statement of Operations and related notes included later in this release. A reconciliation of net earnings (loss) to adjusted operating earnings and diluted earnings (loss) per share to adjusted operating earnings per share, and an explanation of why we believe these non-GAAP financial measures provide useful information to investors, are included later in this release.

** Free cash flow is a non-GAAP financial measure, which equals cash provided by (used for) operations (a GAAP measure) less capital expenditures. The most directly comparable GAAP measure is cash provided by (used for) operations. A reconciliation of cash provided by (used for) operations to free cash flow and an explanation of why we believe this non-GAAP financial measure provides useful information to investors are included later in this release.

SEGMENT INFORMATION

As a result of the completed acquisition of DS Smith on January 31, 2025, the Chief Operating Decision Maker (CODM) reviews and manages the financial results and operations of the following segments on the basis of the new organizational structure: Packaging Solutions North America, Packaging Solutions EMEA and Global Cellulose Fibers. The Packaging Solutions EMEA segment includes the Company's legacy EMEA Industrial Packaging business and the newly acquired EMEA DS Smith business. As such, amounts related to the Company's legacy EMEA Industrial Packaging business have been recast out of the previously reported Industrial Packaging business segment into the new Packaging Solutions EMEA business segment for all prior periods. The newly acquired North America DS Smith business has been included in the Packaging Solutions North America segment. Amounts related to the Company's legacy North America Industrial Packaging business have been reported in the Packaging Solutions North America business segment for all prior periods.

The following table presents net sales and business segment operating profit (loss), which is the Company's measure of segment profitability. Business segment operating profit (loss) is a measure reported to our management for purposes of making decisions about allocating resources to our business segments and assessing the performance of our business segments and is presented in our financial statement footnotes in accordance with ASC 280 - "Segment Reporting". Second quarter 2025 net sales by business segment and operating profit (loss) by business segment compared with the first quarter of 2025 and the second quarter of 2024 are as follows:

Business Segment Results

(In millions)						Second Quarter 2025						First Quarter 2025						Second Quarter 2024
Net Sales by Business Segment
Packaging Solutions North America						$	3,860					$	3,702					$	3,628
Packaging Solutions EMEA						2,291						1,550						328
Global Cellulose Fibers						628						643						717
Corporate and Inter-segment Sales						(12)						6						61
Net Sales						$	6,767					$	5,901					$	4,734
Business Segment Operating Profit (Loss)
Packaging Solutions North America						$	277					$	142					$	281
Packaging Solutions EMEA						(1)						46						10
Global Cellulose Fibers						(4)						17						31

Packaging Solutions North America (PS NA) business segment operating profit (loss) in the second quarter of 2025 was $277 million compared with $142 million in the first quarter of 2025. This includes business segment operating profit (loss) of $(33) million in the second quarter of 2025 and $(9) million in the first quarter of 2025 for the legacy DS Smith North America business. The financial results of the legacy DS Smith North America business include three months in the second quarter compared to two months in the first quarter. In the second quarter of 2025, PS NA net sales were higher driven by higher sales prices for boxes and containerboard and seasonally higher box volumes. Cost of products sold was impacted by lower input

costs, offset by higher manufacturing costs, including planned maintenance outages. Depreciation and amortization in the second quarter of 2025 is lower primarily due to the non-repeat of $193 million of accelerated depreciation associated with the previously announced closure of our Red River containerboard mill in Campti, Louisiana. Additionally, the second quarter of 2025 results were impacted by higher overhead expenses including the non-repeat of favorable medical benefit costs in the first quarter of 2025.

Packaging Solutions EMEA (PS EMEA) business segment operating profit (loss) in the second quarter of 2025 was $(1) million compared with $46 million in the first quarter of 2025. This includes business segment operating profit (loss) of $(10) million in the second quarter of 2025 and $13 million in the first quarter of 2025 for the EMEA DS Smith legacy operations. Net sales in the second quarter of 2025 were $1.9 billion compared with $1.2 billion in the first quarter of 2025. PS EMEA includes EMEA DS Smith results for three months in the second quarter compared to two months in the first quarter. Net sales in the quarter were impacted by higher sales prices and lower volumes in a soft demand environment. Cost of products sold was impacted by higher energy costs and planned maintenance outage costs. Depreciation and amortization expense in the second quarter of 2025 is higher primarily due to the valuation of assets and changes to estimated lives associated with the acquisition accounting of DS Smith. Depreciation and amortization expense is based on an estimate of asset fair values and will be updated throughout the calendar year as we complete the purchase price allocation.

Global Cellulose Fibers business segment operating profit (loss) in the second quarter of 2025 was $(4) million compared with $17 million in the first quarter of 2025. Net sales were lower, as higher average sales prices for both fluff and commodity pulp were more than offset by lower volumes. Cost of products sold was impacted by higher planned outage costs, higher operating costs and lower energy costs. Selling and administrative expense was impacted by the non-repeat of favorable medical benefit costs in the first quarter of 2025.

EFFECTS OF NET SPECIAL ITEMS

Net special items include items considered by management to not be reflective of the Company's underlying operations. Net special items in the second quarter of 2025 amount to a net after-tax charge of $34 million ($0.06 per diluted share) compared with a net after-tax charge of $204 million ($0.46 per diluted share) in the first quarter of 2025 and a net after-tax benefit of $297 million ($0.84 per diluted share) in the second quarter of 2024. Net special items in all periods include the following charges (benefits):

						Second Quarter 2025												First Quarter 2025												Second Quarter 2024
(In millions)						Before Tax						After Tax						Before Tax						After Tax						Before Tax						After Tax
DS Smith combination costs						$	32					$	29		(a)			$	221					$	183		(a)			$	17					$	17		(a)
Severance and other costs						39						34			(b)			83						63			(b)			-						-
Global Cellulose Fibers strategic options costs						15						11			(a)			12						9			(a)			-						-
Strategic advisory fees						-						-						-						-						12						9			(a)
Environmental remediation adjustments						-						-						-						-						25						19			(e)
Net (gain) on sale of business						(51)						(40)			(c)			-						-						-						-
Net (gain) loss on sale of fixed assets						-						-						(67)						(51)			(d)			(5)						(4)			(d)
Tax expense (benefit) related to internal legal entity restructuring						-						-						-						-						-						(338)			(f)
Total special items, net						$	35					$	34					$	249					$	204					$	49					$	(297)

(a)			Transaction and other costs that the Company believes are not reflective of the Company's underlying operations. See notes (a), (b), (d) and (i) on the Consolidated Statement of Operations.
(b)			Severance and other costs associated with the Company's 80/20 strategic approach which includes the realignment of resources and mill strategic actions. See note (e) of the Consolidated Statement of Operations.
(c)			Gain on the sale of five European box plants in Mortagne, Saint-Amand, and Cabourg (France), Ovar (Portugal) and Bilbao (Spain) to satisfy regulatory commitments in connection with the DS Smith combination. See note (f) of the Consolidated Statement of Operations.
(d)			Net (gain) loss on the sale of fixed assets related to the sale of assets at our permanently closed Orange, Texas containerboard mill, miscellaneous land and other items that the Company does not believe are reflective of the Company's underlying operations. See notes (g) and (l) of the Consolidated Statement of Operations.
(e)			Environmental remediation adjustments associated with remediation work at a waste pit site at a mill acquired but never operated by the Company, and last utilized by the predecessor owner of the mill. See note (h) on the Consolidated Statement of Operations.
(f)			Tax benefit related to internal legal entity restructuring. See note (n) on the Consolidated Statement of Operations.

EARNINGS WEBCAST

The Company will host a webcast today to discuss earnings and current market conditions, beginning at 10 a.m. ET (9 a.m. CT). All interested parties are invited to listen to the webcast via the Company's website by clicking on the Investors tab and going to the Events & Presentations page at https://www.internationalpaper.com/investors/events-presentations. A replay of the webcast will also be on the website beginning approximately two hours after the call.

Parties who wish to participate in the webcast via teleconference may dial +1 (646) 307-1963 or, within the U.S. only, (800) 715-9871, and ask to be connected to the International Paper second quarter earnings call. The conference ID number is 5341077. Participants should call in no later than 9:45 a.m. ET (8:45 a.m. CT). An audio-only replay will be available for ninety days following the call. To access the replay, dial +1 (609) 800-9909 or, within the U.S. only, (800) 770-2030 and when prompted for the conference ID, enter 5341077.

About International Paper

International Paper (NYSE: IP; LSE: IPC) is the global leader in sustainable packaging solutions. With company headquarters in Memphis, Tennessee, USA, and EMEA (Europe, Middle East and Africa) headquarters in London, UK, we employ more than 65,000 team members and serve customers around the world with operations in more than 30 countries. Together with our customers, we make the world safer and more productive, one sustainable packaging solution at a time. Net sales for 2024 were $18.6 billion. In 2025, International Paper acquired DS Smith creating an industry leader focused on the attractive and growing North American and EMEA regions. Additional information can be found by visiting internationalpaper.com.