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First Quarter 2017 Earnings | April 27, 2017
Earnings Presentation | First Quarter 2017
Forward-Looking Statements
Certain statements in these slides and made during this presentation may be considered forward-looking
statements. These statements reflect management's current views and are subject to risks and
uncertainties that could cause actual results to differ materially from those expressed or implied in these
statements. Factors which could cause actual results to differ include but are not limited to: (i) the level of
our indebtedness and changes in interest rates; (ii) industry conditions, including but not limited to
changes in the cost or availability of raw materials, energy and transportation costs, competition we face,
cyclicality and changes in consumer preferences, demand and pricing for our products; (iii) global
economic conditions and political changes, including but not limited to the impairment of financial
institutions, changes in currency exchange rates, credit ratings issued by recognized credit rating
organizations, the amount of our future pension funding obligation, changes in tax laws and pension and
health care costs; (iv) unanticipated expenditures related to the cost of compliance with existing and new
environmental and other governmental regulations and to actual or potential litigation; (v) changes in our
estimates for the costs and insurance coverage associated with the January 2017 incident at our
Pensacola, Florida mill; (vi) whether we experience a material disruption at one of our other manufacturing
facilities; (vii) risks inherent in conducting business through joint ventures; (viii) the failure to realize the
expected synergies and cost-savings from our purchase of the cellulose fibers business of Weyerhaeuser
Company; and (ix) our ability to achieve the benefits we expect from all other strategic acquisitions,
divestitures and restructurings. These and other factors that could cause or contribute to actual results
differing materially from such forward-looking statements are discussed in greater detail in our Securities
and Exchange Commission filings. We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
2
Earnings Presentation | First Quarter 2017
Statements Relating to Non-GAAP Financial Measures
During the course of this presentation, certain non U.S. GAAP financial measures
will be presented, such as Adjusted Operating EPS, Adjusted EBIT, Adjusted
EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Adjusted ROIC.
A reconciliation of all presented non-GAAP measures (and their components) to
U.S. GAAP financial measures is available on the company’s website at
internationalpaper.com under Performance/Investors.
3
Earnings Presentation | First Quarter 2017
Ilim JV Information
All financial information and statistical measures regarding our 50/50 Ilim joint
venture in Russia (“Ilim”), other than historical International Paper Equity Earnings
and dividends received by International Paper, have been prepared by the
management of Ilim. Any projected financial information and statistical measures
reflect the current views of Ilim management and are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied by such projections. See “Forward-Looking Statements.”
4
Earnings Presentation | First Quarter 2017
First Quarter 2017 Results
1 Adjusted operating EPS based on Adjusted Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and
non-operating pension expense)
5
Transitional quarter with overall results
as expected
Price realizations and recent announcements
across key businesses:
N.A. Industrial Packaging
Global Cellulose Fibers (GCF)
Brazil and EMEA Papers
N.A. Consumer Packaging
Good management of Pensacola mill digester
incident and successful start-up achieved
Integration of GCF progressing well with
$14MM of synergies in the quarter
OCC a significant headwind (~$30MM impact);
1Q17 average prices up $40/ton vs. 4Q16
Received $127MM dividend YTD from Ilim JV
$0.80$0.73
$0.60
1Q16 4Q16 1Q17
Adj. Operating EPS1
Earnings Presentation | First Quarter 2017
1Q17 Financial Results
1Q16 4Q16 1Q17
Sales ($B) $5.1 $5.4 $5.5
Adj. EBIT1 ($MM) $522 $498 $431
Adj. Operating EPS2 $0.80 $0.73 $0.60
Operating EPS impact of Ilim F/X3 – IP Share
$0.03 $0.01 $0.06
Adj. EBITDA1 ($MM) $806 $826 $776
Adj. EBITDA Margin1 15.8% 15.4% 14.1%
Free Cash Flow4 ($MM) $311 $467 $259
1 From continuing operations before special items and non-operating pension expense2 Adjusted operating EPS based on Adjusted Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and non-operating
pension expense)3 Represents F/X impact including that related to Ilim JV USD-denominated net debt (balance of ~$0.8B at end of 1Q17)4 See slide #21 for a reconciliation of cash provided by operations to free cash flow
6
806 826 776
1Q16 4Q16 1Q17
Adj. EBITDA1
($MM)
Earnings Presentation | First Quarter 2017
Pensacola Recovery | Digester Event Summary
7
• Adjustments to maintenance outage schedule
• Orders redirected to other mills
• Ability to use spare digester dome from Riegelwood mill
System Efforts to Mitigate Impact
• Remediation teams began cleaning common areas within 24 hours
of the incident
• Assessment and cleanup of impacted residences initiated within 48 hours
• Established information line, conducted door-to-door visits, held open house
Community Outreach
• Naturally produced pulping gases combined with pressurized air, triggered
an event never before experienced in IP
• Issued an alert to all IP mills to prevent recurrence
• Shared findings with industry globally
Findings
Jan 22, 2017
Digester Incident
No Injuries
Reported
Mill Down
Jan 23, 2017
Unified Command in
place - Initiated clean
up efforts Investigation
Mar 17, 2017
Spare Digester
Dome Delivered
from Riegelwood
Feb 3, 2017
Fluff Line
Start Up
April 3, 2017
Containerboard
Start Up
Costs & Insurance Recovery• Total costs estimated to be ~$80MM, including $16MM of capex
• Unfavorable 1Q17 earnings impact of $46MM before insurance and mitigation
• Insurance recovery of $12MM booked for 1Q17
• Bottom line impact for 1Q17 mitigated by outage moves and other cost-saving measures
Earnings Presentation | First Quarter 2017
.73
.60
(.04)(.04)
(.09)
(.03) (.07)
.09.01
.01.03
4Q16 Price / Mix Volume Operations& Costs
MaintenanceOutages
Input Costs Corporate/Other
Ilim JV Outages All Other 1Q17
1Q17 vs. 4Q16 Adj. Operating EPS
8
Adjusted operating EPS based on Adjusted Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and non-operating
pension expense)
Pulp
Acquisition
Earnings Presentation | First Quarter 2017
379360
(10) (2) (34)
(43)
70
4Q16 Price / Mix Volume Operations& Costs
MaintenanceOutages
Input Costs 1Q17
Industrial Packaging | 1Q17 vs. 4Q16 Adj. EBIT1
9
$ M
illio
n
1 Segment adjusted operating profit before special items
Earnings Presentation | First Quarter 2017
N.A. Industrial Packaging | Update on IP Pricing Activity
10
October 2016 price increase fully implemented
Box prices back to 4Q15 levels, but margins remain lower due to
higher input costs
2Q17 average OCC cost forecast similar to 1Q17 levels
Export containerboard pricing continues to improve
March 2017 price increase implementation underway
1 IP data
95
96
97
98
99
100
101
102
103
0
20
40
60
80
100
120
140
160
4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17
Bo
xO
CC
Indexed to 4TH Quarter 20151
OCC Delivered Cost Box Pricing
Earnings Presentation | First Quarter 2017
Global Cellulose Fibers | 1Q17 vs. 4Q16 Adj. EBIT1
11
1 Segment adjusted operating profit before special items
(32)
(51)
(1)(2) (1)
(41)
7
3
16
4Q16 Price / Mix Volume Operations& Costs
MaintenanceOutages
Input Costs Outages All Other 1Q17
Pulp
Acquisition
Earnings Presentation | First Quarter 2017
Global Cellulose Fibers | Integration Synergies Update
12
Synergy Category
Description
1Q17
Actual
($MM)
1Q17
Run Rate
Annualized
($MM)
Full
Synergy
Target
($MM)
SG&A / Other Eliminate duplication $7.0 $28 $45
Commercial Mix
Opportunities
Customer and segment
optimization
High value product growth
Leverage innovation
$3.5 $14 $40
Manufacturing, Supply Chain,
& Sourcing
Grade / machine mix
optimization
Logistics optimization
Efficiency improvements
(Waste, Freight)
Purchasing opportunities
$3.5 $14 $90
Total $14 $56 $175
Earnings Presentation | First Quarter 2017
121
100
(16)
(19)(8)21 1
4Q16 Price / Mix Volume Operations& Costs
MaintenanceOutages
Input Costs 1Q17
Printing Papers | 1Q17 vs. 4Q16 Adj. EBIT1
13
$ M
illio
n
1 Segment adjusted operating profit before special items
Earnings Presentation | First Quarter 2017
41
33
(5)
(11) (3)11
4Q16 Price / Mix Volume Operations& Costs
MaintenanceOutages
Input Costs 1Q17
Consumer Packaging | 1Q17 vs. 4Q16 Adj. EBIT1
14
$ M
illio
n
1 Segment adjusted operating profit before special items
0
Earnings Presentation | First Quarter 2017
Consumer Packaging | SBS Industry Fundamentals
15
Source: AF&PA
92.4%
98.8%
102.2%
84%
86%
88%
90%
92%
94%
96%
98%
100%
102%
104%
Monthly Operating Rates2016- 2017 YTD
U.S. SBS Industry - 1Q17
Backlogs +28% Y/Y
Shipments +4.5% Y/Y
Mill Inventory Flat Y/Y
Trade Flows
Export and
Imports Up
Modestly Y/Y
Jan -17Jan -16 Jul -16
+28% YoY
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
Weekly Unmade Orders2016 - 2017 YTD
Earnings Presentation | First Quarter 2017
Ilim Joint Venture | 1Q17 vs. 4Q16
$ Million 1Q16 4Q16 1Q17
Sales Volume (thousand tons)
821 987 748
Sales $441 $539 $449
EBITDA $208 $194 $191
F/X (Impact of USD Net Debt)1 $28 $14 $58
Adj. Operational EBITDA2 $180 $180 $133
IP Equity Earnings (Loss)3 $62 $45 $50
Seasonally weaker sales volume and higher input costs partially offset by higher
pulp prices
F/X gain on USD denominated net debt driven by ruble strengthening
Seasonally stronger volume expected in 2Q17, partially offset by heavy outages;
non-repeat of 1Q17 F/X gain
16
Ilim JV results are on U.S. GAAP basis 1 Represents F/X impact including that related to Ilim JV USD-denominated net debt (balance of ~$0.8B at end of 1Q17); Ilim Group’s functional currency is the
Ruble (RUB); Non-functional-denominated currency balances are measured monthly using the month-end exchange rate2 Before F/X impact including USD-denominated net debt3 IP Equity Earnings (Loss) for 1Q16, 4Q16 and 1Q17 include after-tax F/X gains (primarily on USD-denominated net debt) of $11MM, $6MM and $23MM, respectively
Earnings Presentation | First Quarter 2017
North America EMEA & Russia Brazil
Price / Mix
Packaging Implementation Stable Stable
Cellulose Fibers Implementation
Paper Stable Increasing Increasing
Volume
Packaging Seasonal Increase Stable Stable
Cellulose Fibers Stable
Paper Stable Stable Stable
Operations & Other
Packaging Pensacola Costs Stable Stable
Cellulose Fibers Non-repeats
Paper Stable Stable Stable
Mill Maintenance Outages
Packaging Increase $63MM Increase $3MM Decrease $2MM
Cellulose Fibers Decrease $5MM
Papers Increase $13MM Increase $7MM Increase $3MM
Inputs & FreightPackaging Stable Stable Stable
Cellulose Fibers Stable
Printing Papers Stable Stable Stable
Other Items
Corporate expense, ~$15MM in 2Q17
Interest expense, in line with full-year outlook of ~$575MM-$600MM
Tax rate, in line with full-year outlook of ~33%
Ilim JV, forecasting Equity Earnings of ~$40MM
Second Quarter Outlook | Changes from 1Q17
17
Earnings Presentation | First Quarter 2017
EMEA – Eurozone
Containerboard and Box
18
4Q16 1Q17 2Q17 3Q17 4Q17
NBSK, SBSK
NBSK, SBSK, Fluff
NBSK, SBSK, Fluff
NBSK, SBSK, Fluff
Fluff pulp
N.A.
Industrial
Packaging
Global
Cellulose
Fibers
Printing
Papers
Brazil Domestic
N.A.
Consumer
Packaging
Jan RISI Pub: $15-$20/ton
Feb RISI Pub: $20-$25/ton
Mar RISI Pub: $20-$30/ton
Effective May 1: $40/ton
Effective March 1: 10.9%
CBD and Box
EMEA – Eurozone & Poland
Effective March 1: 5.0%
Latam ExportEffective May 1: 7.0%
SBS
April RISI Partial Pub ($20 of announced $50)
Nov RISI Pub: $40/ton April RISI Pub: $50/ton
Global Cellulose Cumulative Run Rate
(announced + published)
• NBSK +$90
• SBSK +$100
• Fluff +$115
Varies by Region
Export Containerboard
Effective May 15: 5.0%
Legend:
Announced
Effective April 1: $20-$30/ton
IP Key Pricing Activity | Setting the Stage for Strong Second Half
Earnings Presentation | First Quarter 2017
First half initiatives set stage for strong second half with continued momentum
Implementation of recent price announcements / margin improvement
Operational excellence and cost-savings efforts
Significantly lower maintenance outage expenses in second half
GCF integration and synergies
Madrid Mill conversion and start up
Allocate capital to create value with a near-term focus on debt reduction
Remain confident in upside to full year 10%+ YoY EBITDA growth
Key Takeaways & Outlook
19
Earnings Presentation | First Quarter 2017
AppendixInvestor Relations Contacts
Jay Royalty 901-419-1731
Michele Vargas 901-419-7287
Media Contact
Tom Ryan 901-419-4333
20
Earnings Presentation | First Quarter 2017
$ Million 1Q16 4Q16 1Q17
Cash Provided by Operations $620 $912 $633
Cash Invested in Capital Projects ($309) ($445) ($374)
Cash Contribution to Pension Plan - - -
Free Cash Flow $311 $467 $259
Free Cash Flow
21
Earnings Presentation | First Quarter 2017
Maintenance Outages Expenses | 2017 Forecast
22
$ Million 1Q17A 2Q17F 3Q17F 4Q17F 2017F
Industrial Packaging $70 $103 $47 $32 $252
North America 68 103 47 32 250
Brazil 2 0 0 0 2
Global Cellulose Fibers $50 $45 $8 $11 $114
Printing Papers $23 $46 $2 $13 $84
North America 23 36 1 11 71
Europe 0 7 0 0 7
Brazil 0 3 0 2 5
India 0 0 1 0 1
Consumer Packaging $0 $31 $0 $4 $35
North America 0 28 0 4 32
Europe 0 3 0 0 3
Total Impact $143 $225 $57 $60 $485
Earnings Presentation | First Quarter 2017
IP North American Downtime
23
140 146
72 92141 125
86117 93
78
230
212
85107 41
35
Maintenance Economic
18 1221
0 0 10 0
13
4 29
31
1513
29
0
30
1125
010
243
18 15 124 29
18 0
77
131
Containerboard
Uncoated Papers
Cellulose Fibers
Th
ou
sa
nd
To
ns
Th
ou
sa
nd
To
ns
Th
ou
sa
nd
To
ns
Th
ou
sa
nd
To
ns
150
Coated Paperboard
201
31
16
322
46
353
210193
158
13
55128
Earnings Presentation | First Quarter 2017
Special Items Pre-Tax ($ Million) 1Q16 4Q16 1Q17
Industrial Packaging
Holmen Acquisition Bargain Purchase Gain $6
Turkey Facility Closure ($7)
Impairment of Asia Box & Restructuring ($37)
Other ($1)
Global Cellulose Fibers
Pulp Business Inventory Step-up Amortization
($19) ($14)
Pulp Business Acquisition ($19) ($4)
Other ($1)
Consumer Pkg. Riegelwood Repurposing ($9)
Corporate Sale of Arizona Chemical Investment $8
Total Special Items Before Tax ($38) ($45) ($14)
Special Items Before Tax | Continuing Operations
24
Earnings Presentation | First Quarter 2017
Special Items Net of Taxes
1Q17
$ Million EPS
Earnings Before Special Items $249 $0.60
Special Items Net of Taxes:
Tax Expense – International Investment Restructuring ($15)
Pulp Business Inventory Step-up Amortization ($8)
Pulp Business Acquisition ($2)
Holmen Acquisition Bargain Purchase Gain $6
Other ($2)
Total Special Items Net of Taxes ($21) ($0.05)
Non-Operating Pension Expense ($19) ($0.05)
Net Earnings $209 $0.50
25
Earnings Presentation | First Quarter 2017
Adj. Operating Profits by Industry Segment | Continuing Operations
26
$ Million 1Q16 4Q16 1Q17
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings $317 $280 $244
Interest Expense, Net $123 $136 $142
Noncontrolling Interest / Equity Earnings Adjustment - - -
Corporate Items, Net $21 $11 $11
Special Items, Net $38 $45 $14
Non-Operating Pension Expense $44 $37 $31
Adj. Operating Profit Before Special Items $543 $509 $442
Industrial Packaging1 $433 $379 $360
Global Cellulose Fibers1,2 ($50) ($32) ($51)
Printing Papers1 $135 $121 $100
Consumer Packaging1 $25 $41 $33
Total Adj. Industry Segment Operating Profit1,2 $543 $509 $442
Equity Earnings (Loss), net of taxes – Ilim $62 $45 $50
1 Excludes special items (Non-GAAP)2 Earnings from newly acquired pulp business are reflected beginning December 1, 2016
Earnings Presentation | First Quarter 2017
Geographic Business Segment Operating Results | Quarterly
27
$ MillionSales D & A Adj. Operating Profit1
1Q16 4Q16 1Q17 1Q17 1Q16 4Q16 1Q17
Industrial Packaging
North America $2,990 $3,052 $3,155 $170 $438 $384 $362
Europe $294 $325 $317 $8 $7 $9 $8
Brazil $42 $77 $59 $5 ($8) ($14) ($10)
Global Cellulose Fibers2
Global Cellulose Fibers $212 $379 $564 $59 ($50) ($32) ($51)
Printing Papers
North America $481 $465 $468 $19 $61 $43 $33
Europe $258 $284 $274 $10 $40 $28 $29
Brazil $190 $260 $214 $26 $35 $50 $39
India $43 $47 $48 $5 ($1) $0 ($1)
Consumer Packaging
North America $418 $386 $388 $25 ($1) $21 $14
Europe $77 $78 $78 $2 $26 $20 $19
Does not reflect total company sales1 Excludes special items (Non-GAAP)2 Earnings from newly acquired pulp business are reflected beginning December 1, 2016
Earnings Presentation | First Quarter 2017
2017 Operating Earnings
28
Pre-Tax$MM
Tax$MM
Non-controlling
Interest$MM
EquityEarnings
Net Income$MM
Average Shares
MMDiluted EPS1
Net Earnings from Continuing Operations
1Q17 $244 ($83) - $48 $209 416 $0.50
Net Special Items
1Q17 $14 $7 - - $21 416 $0.05
Non-Operating Pension Expense
1Q17 $31 ($12) - - $19 416 $0.05
Adj. Operating Earnings
1Q17 $289 ($88) - $48 $249 416 $0.60
1 A reconciliation to GAAP EPS is available at www.internationalpaper.com under the Performance tab, Investors section
Earnings Presentation | First Quarter 2017
Adj. Operating EPS
29
2006 as originally reported
2007-2011 adjusted for elimination of the Ilim JV reporting lag
2006-2010 Net Earnings from continuing operations and before special items; 2010 onward reflects Operating Earnings
xpedx is reflected as a Discontinued Operation from 2010 onward
.12
.35
.40
.47 .45
.52
.57
.73
.45.49
.41
.15
.07
.27
.38
.22
.05
.44
.85
.72.76 .77 .78
.67
.58
.49
.77
.66.64
.61
1.01
.81
.60
.93.95
.53
.84
.97 .97
.87
.80
.92 .91
.73
.60.42
.08
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
17
2006 2007 20102008
Impact of Mineral
Rights Gain
2009
.83
2011
.93Final Land Sale
2012 2013 2014 2015 2016
Earnings Presentation | First Quarter 2017
.80
.60
(.04) (.08) (.14)
(.02)(.03)
(.06)
.03 .09
.05
1Q16 Price / Mix Volume Operations& Costs
MaintenanceOutages
Input Costs Corporate& Other Items
Ilim JV Outages All Other 1Q17
1Q17 vs. 1Q16 Adj. Operating EPS
30
Adjusted operating EPS based on Adjusted Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and non-operating
pension expense)
Pulp
Acquisition
Earnings Presentation | First Quarter 2017
433
360
(45)
(83)34
18
3
1Q16 Price / Mix Volume Operations& Costs
MaintenanceOutages
Input Costs 1Q17
Industrial Packaging | 1Q17 vs. 1Q16 Adj. EBIT1
31
$ M
illio
n
1 Segment adjusted operating profit before special items
Earnings Presentation | First Quarter 2017
1Q17 vs. 4Q16 1Q17 vs. 1Q16
Business VolumePrice / Mix
per TonVolume
Price / Mixper Ton
N.A. Container1 (9.0%) $22 (0.7%) $11
European Container (2%) (€4) 1% (€6)
Average IP volume and price realization (includes the impact of mix across all segments)1 On a per day FBA basis
Industrial Packaging | Volume and Pricing Trends
32
Earnings Presentation | First Quarter 2017
N.A. Industrial Packaging Relative Adj. EBITDA Margins
33
21.8%20.4%
17.5%
19.7% 20.6%
15.8%
18.7%
20.6%
15.9%
IP PCA WestRock
1Q16 4Q16 1Q17
1Trailing Twelve Months
IP Adjusted EBITDA margins based on North American Industrial Packaging operating profit before special items
Excludes the Recycling Business and revenue from trade volumes
Competitor Adjusted EBITDA margin estimates obtained from public filings and IP analysis
TTM1
20.7%
17.0%
TTM1
21.1%
TTM1
Earnings Presentation | First Quarter 2017
Global Cellulose Fibers | 1Q17 vs. 1Q16 Adj. EBIT1
34
1 Segment adjusted operating profit before special items
(50) (51)
(17)
(18)
(1)
(38)42
31
1Q16 Price / Mix Volume Operations& Costs
MaintenanceOutages
Input Costs Outages All Other 1Q17
0
Pulp
Acquisition
Earnings Presentation | First Quarter 2017
Global Cellulose Fibers | Volume and Pricing Trends
35
1Q17 vs. 4Q161 1Q17 vs. 1Q161
Business VolumePrice / Mixper Tonne
VolumePrice / Mixper Tonne
Pulp (metric ton) (1%) ($27) 6% ($28)
Average volume and price realization (includes the impact of mix across all grades and destinations)1Proforma basis- Combined Global Cellulose Fibers
Earnings Presentation | First Quarter 2017
135
100
(26)
(1) (7)
(6)
5
1Q16 Price / Mix Volume Operations& Costs
MaintenanceOutages
Input Costs 1Q17
Printing Papers | 1Q17 vs. 1Q16 Adj. EBIT1
36
$ M
illio
n
1 Segment adjusted operating profit before special items
Earnings Presentation | First Quarter 2017
1Q17 vs. 4Q16 1Q17 vs. 1Q16
Business VolumePrice / Mix
per TonVolume
Price / Mixper Ton
N.A. Printing Papers 4% ($32) 3% ($55)
European Papers1 (8%) (€3) 7% (€36)
Average IP volume and price realization (includes the impact of mix across all grades)1 Excludes Russia
Printing Papers | Volume and Pricing Trends
37
Earnings Presentation | First Quarter 2017
N.A. Printing Papers Relative Adj. EBITDA Margins
38
16.8%17.2%
12.9%13.5%
18.4%
15.0%
11.1%
15.6%
IP PCA Domtar
1Q16 4Q16 1Q17
UFS
Reports
4/27
1Trailing Twelve Months
IP Adjusted EBITDA margins based on operating profit from continuing operations before special items
Competitor Adjusted EBITDA margin estimates obtained from public filings and IP analysis
TTM1
15.4%16.7%
Earnings Presentation | First Quarter 2017
Printing Papers | IP Brazil
39
$ Million 1Q16 4Q16 1Q17
Sales $190 $260 $214
Adj. Earnings $35 $50 $39
Adj. EBITDA Margin 29% 29% 30%
1Q17 vs. 4Q16 1Q17 vs. 1Q16
Uncoated Freesheet VolumePrice / Mix
per TonVolume
Price / Mixper Ton
Domestic (BRL) (21%) (R$33) (11%) R$345
Export (USD) (11%) ($21) 18% ($42)
Segment adjusted operating profit before special items
IP Brazil results are reported in the Printing Papers segment
Average IP Brazil price realization (includes the impact of mix across all grades)
Earnings Presentation | First Quarter 2017
25
33
(11)
(2)1
18
2
1Q16 Price / Mix Volume Operations& Costs
MaintenanceOutages
Input Costs 1Q17
Consumer Packaging | 1Q17 vs. 1Q16 Adj. EBIT1
40
$ M
illio
n
1 Segment adjusted operating profit before special items
Earnings Presentation | First Quarter 2017
Average IP price realization (includes the impact of mix across all grades)1 All periods exclude Carolina brand coated bristols sales
1Q17 vs. 4Q16 1Q17 vs. 1Q16
VolumePrice / Mix
per TonVolume
Price / Mixper Ton
N.A. Coated Paperboard1 6% ($18) (2%) ($42)
Revenue Revenue
Foodservice (8%) (2%)
Consumer Packaging | Volume and Pricing Trends
41
Earnings Presentation | First Quarter 2017
Ilim Joint Venture | Full Year Financials
42
2013 2014 2015 2016
Sales Volume (Million tons) 2.7 3.2 3.3 3.5
Sales ($B) 1.9 2.1 1.9 1.9
Debt ($B) 1.5 1.4 1.2 1.5
Adj. Operating EBITDA ($MM) 203 459 694 680
F/X Gain (Loss)1 ($MM) (80) (674) (188) 63
EBITDA ($MM) 123 (215) 506 743
Depreciation ($MM) 176 188 128 121
EBIT ($MM) (53) (403) 378 622
Interest Expense ($MM) 39 69 52 81
Net Income / (Loss) ($MM) (72) (359) 237 385
IP Equity Earnings / (Loss) ($MM) (46) (194) 131 199
Dividends (to IP) ($MM) 0 56 35 60
Ilim JV results are US GAAP basis 1 Represents F/X impact including that related to Ilim JV USD-denominated net debt (balance of ~$0.6B at year end 2016)
Earnings Presentation | First Quarter 2017
Ilim Joint Venture | Volume and Pricing Trends
43
1Q17 vs. 4Q16 1Q17 vs. 1Q16
Business VolumePrice / Mixper Tonne
VolumePrice / Mixper Tonne
Pulp (metric ton) (24%) $22 (7%) $17
Average Ilim JV (100%) volume and price realization (includes the impact of mix across all grades and destinations)
Earnings Presentation | First Quarter 2017
Total Cash Cost Components | 1Q17 YTD
44
North American mills only (excludes newly acquired pulp business)
Fiber34%
Materials16%
Freight12%
Labor13%
Energy8%
Overhead10%
Chemicals7%
Earnings Presentation | First Quarter 2017
($31)
($11) ($10)
($3)
Fiber Energy Chemicals Freight
North America Outside North America
($43)
($1)
($8)
($3)
IndustrialPackaging
GlobalCellulose
Fibers
PrintingPapers
ConsumerPackaging
Energy Wood Chemicals Freight OCC
By Business By Input Type
Input costs ($MM) for continuing businesses
Global Input Costs vs. 4Q16 | $55MM Unfavorable, or $0.09/Share
45
OCC
Wood
Earnings Presentation | First Quarter 2017
($41)
($32)
($6) ($9)
Fiber Energy Chemicals Freight
North America Outside North America
($83)
($1)
($6)
$2
IndustrialPackaging
GlobalCellulose
Fibers
PrintingPapers
ConsumerPackaging
Energy Wood Chemicals Freight OCC
By Business By Input Type
Global Input Costs vs. 1Q16 | $88MM Unfavorable, or $0.14/Share
46
OCC
Wood
Input costs ($MM) for continuing businesses
Earnings Presentation | First Quarter 2017
90
95
100
105
110
115
120
125
130
U.S. Mill Wood Delivered Cost Trend | 1Q17 Average Cost Down 1% vs. 4Q16
47
IP data, cost Indexed to January 2007 values
2008 2009 2010 2011 2012 2013 2014 2015 2016
Earnings Presentation | First Quarter 2017
40
60
80
100
120
140
160
180
200
220
IP data, cost Indexed to January 2007 values
U.S. OCC Delivered Cost Trend | 1Q17 Average Cost Up 25% vs. 4Q16
48
2008 2009 2010 2011 2012 2013 2014 2015 2016
Earnings Presentation | First Quarter 2017
U.S. Natural Gas Cost Trend | 1Q17 Average Cost Up 11% vs. 4Q16
49
0
50
100
150
200
250
IP data, cost Indexed to January 2007 values
NYMEX Natural Gas closing prices
2008 2009 2010 2011 2012 2013 2014 2015 2016
Earnings Presentation | First Quarter 2017
0
50
100
150
200
250
300
U.S. Fuel Oil Cost Trend | 1Q17 Average Cost Up 23% vs. 4Q16
50
IP data, cost Indexed to January 2007 values
WTI Crude prices
2008 2009 2010 2011 2012 2013 2014 2015 2016
Earnings Presentation | First Quarter 2017
75
100
125
150
175
200
U.S. Chemical Composite Cost Trend | 1Q17 Average Cost Flat vs. 4Q16
51
IP data, cost Indexed to January 2007 values
Delivered cost to U.S. facilities: includes Caustic Soda, Sodium Chlorate, Starch and Sulfuric Acid 2007 - 2008 excludes WY PKG
2008 2009 2010 2011 2012 2013 2014 2015 2016
Earnings Presentation | First Quarter 2017
2017 Global Consumption | Annual Purchase Estimates for Key Inputs
52
CommodityNorth
AmericaNon – North
America
Energy
Natural Gas (MMBTUs) 85,000,000 11,000,000
Fuel Oil (Barrels) 370,000 400,000
Coal (Tons) 130,000 600,000
FiberWood (Tons) 60,000,000 8,000,000
Old Corrugated Containers / DLK (Tons) 4,800,000 400,000
Chemicals
Caustic Soda (Tons) 400,000 70,000
Starch (Tons) 390,000 120,000
Sodium Chlorate (Tons) 220,000 50,000
LD Polyethylene (Tons) 40,000 -
Latex (Tons) 10,000 6,000
Includes purchase estimates for newly acquired pulp business