Third Quarter 2015 Earnings | October 28, 2015
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015 2
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 increases 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) whether we experience a material disruption at one of our
manufacturing facilities; (vi) risks inherent in conducting business through joint ventures; (vii) successful
completion of the expected fourth-quarter 2015 extension of the loan agreements used to monetize the
installment notes received in connection with our 2006 sale of forestlands; (viii) the execution of a definitive
agreement to sell our corrugated box business in China and South East Asia, and the successful closing of
the transaction within the estimated timeframe; and (ix) our ability to achieve the benefits we expect from all
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.
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Statements Relating to Non-GAAP Financial Measures
During the course of this presentation, certain non-U.S. GAAP financial information
will be presented.
A reconciliation of those numbers to U.S. GAAP financial measures is available on
the company’s website at internationalpaper.com under Investors.
3
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
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. Ilim management has indicated that the financial information
was prepared in accordance with International Financial Reporting Standards and
extracted from Ilim’s financial statements, but International Paper has not verified or
audited any of this information. 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 | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
$0.95 $0.97 $0.97
3Q14 2Q15 3Q15
EPS1
($MM)
Third Quarter 2015 Results
1 EPS based on Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and non-operating pension expense)
5
Solid results overall for the quarter,
driven by continued strength of
NA Industrial Packaging with 25%
EBITDA margins
Ilim JV continues strong performance
Record operational EBITDA results
IP received $35MM dividend
ROIC YTD of 10%+
Dividend increase along with
strengthened payout policy
Completed restructuring of
2006 timber monetization
Deal to sell IP’s 55% equity interest in
Sun JV – closing in progress
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
3Q15 Financial Results
3Q14 2Q15 3Q15
Sales ($B) $6.1 $5.7 $5.7
EBIT1 ($MM) $835 $650 $757
EPS2 $0.95 $0.97 $0.97
EPS impact of Ilim F/X3 – IP Share
($0.19) $0.06 ($0.15)
EBITDA1 ($MM) $1,193 $978 $1,086
EBITDA Margin1 19.7% 17.1% 19.1%
Free Cash Flow4
($MM) $696 $511 $512
1 From continuing operations before special items and non-operating pension expense 2 EPS based on Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and non-operating pension expense) 3 Represents F/X impact primarily related to Ilim JV USD-denominated net debt (balance of ~$1.1B at end of 3Q2015) 4 See slide #21 for a reconciliation of cash provided by operations to free cash flow
6
$1,193
$978 $1,086
3Q14 2Q15 3Q15
EBITDA1 ($MM)
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
.97 .97 (.05)
(.04) (.18)
.05
.17 .05
2Q15 Price / Mix Volume Operations & Costs
Maintenance Outages
Input Costs Other Ilim JV 3Q15
7
3Q15 vs. 2Q15 EPS
Operating Earnings
0
Operations .04
FX (.22)
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
528 553
(13) (12)
(21)
1
70
2Q15 Price / Mix Volume Operations & Costs
Maintenance Outages
Input Costs 3Q15
8
Industrial Packaging | 3Q15 vs. 2Q15 $
Mill
ion
Segment operating profit before special items
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015 9
NA Industrial Packaging | Driving Results Through Commercial Execution
1 IP EBITDA margins based on operating profit before special items; Excludes the Recycling Business and revenue from trade volumes
Strong and sustainable margins
23.7%
25.5%
22.7% 22.9% 24.1%
25.2%
2Q14 3Q14 4Q14 1Q15 2Q15 3Q15
EBITDA Margins1
Shipping & Distribution Online retail significantly outpacing growth in other segments
Agriculture Consumer preference toward fresh / healthy foods driving continued growth
Beverage Volume growth in U.S. market
Protein Trending recovery in poultry / export bans lifted in September
Processed Foods Changing consumer trends / shift toward healthy and fresh options
3Q15 Highlights
Improved demand in key segments IP serves
Good momentum closing volume
gap vs. industry shipments
-2.6%
-2.0%
-1.3%
Q1 '15 Q2 '15 Q3 '15
Source: FBA, IP Analysis
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
34
41
(6)
3
5
5
2Q15 Price / Mix Volume Operations & Costs
Maintenance Outages
3Q15
10
Consumer Packaging | 3Q15 vs. 2Q15 $
Mill
ion
Segment operating profit before special items
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
101
179
(13)
(2)
18
20
31
24
2Q15 Price / Mix Volume Operations & Costs
Maintenance Outages
Input Costs FX / Other 3Q15
11
Printing Papers | 3Q15 vs. 2Q15 $
Mill
ion
Segment operating profit before special items
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015 12
Brazil Papers | Navigating Well Through Difficult Macro Conditions
First half domestic price increases partially offsetting weak
demand and high general inflation in Brazil
Competitive position in export markets benefitting from currency
devaluation, resulting in higher margins
Expect to build on momentum in 4Q with seasonally higher
volume and implementation of additional domestic price
increases
Delivering strong earnings despite continued economic
weakness in Brazil
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Ilim Joint Venture | 3Q15 vs. 2Q15
$ Million 3Q14 2Q15 3Q15
Sales Volume (thousand tons)
766 826 828
Sales $520 $500 $477
Operational EBITDA1 $100 $153 $194
F/X (Impact of USD Net Debt2) ($210) $65 ($176)
IP Equity Earnings(Loss)3 ($70) $67 ($9)
Strong operational performance continues
IP received $35MM dividend payment in 3Q15
Moving into 4Q15, expect seasonally higher volume, offset by lower
average pulp prices and higher input costs
13
Ilim JV results are on an IFRS basis with the exception of IP Equity Earnings which is US GAAP 1 Before F/X impact primarily on USD-denominated net debt 2 Represents F/X impact primarily related to Ilim JV USD-denominated net debt (balance of ~$1.1B at end of 3Q2015); Ilim Group’s functional currency is the Ruble
(RUB); Non-functional-denominated currency balances are measured monthly using the month-end exchange rate
3 IP Equity Earnings(Loss) for 3Q15 and 3Q14 include after-tax f/x losses (primarily on USD-denominated net debt) of $(65)MM and $(82)MM, respectively; 2Q15
includes an after-tax f/x gain of $27MM.
Earnings Presentation | Third Quarter 2015 14
Fourth Quarter Outlook | Changes from 3Q15
North America EMEA & Russia Brazil
Volume Paper Stable Stable Seasonally Stronger
Packaging 3 Less Days Stable Stable
Pricing / Mix Paper Seasonal Mix Stable Stable
Packaging Seasonal Mix Stable Stable
Operations & Other
Paper Flood & Seasonality Stable Stable
Packaging Seasonality Stable Stable
Inputs & Freight Paper Higher Energy Costs Stable Stable
Packaging Higher Energy Costs Stable Stable
Mill Maintenance Outages
Paper Increase $21MM Decrease $14MM Decrease $2MM
Packaging Increase $46MM Decrease $5MM N/A
Asia1 Stable with exception of $1MM decrease in mill maintenance outages
Ilim JV Equity Earnings Seasonally higher volume offset by lower average pulp prices and higher input costs
Non-recurring 3Q currency impact of ($0.15) on USD net debt, assuming stable F/X
as of Sept. 30, 2015
Other Items Tax rate, in line with full-year outlook of 33%
Interest expense, ~$140MM in 4Q2015
Corporate expense, ~$15MM in 4Q2015
1 Includes India
Earnings Presentation | Third Quarter 2015
Capital Allocation | IP’s Balanced Use of Cash
15
Systematically Return Cash to Shareholders
Trough-Tested Sustainable Dividend
Opportunistic Share Repurchases
Cash From
Operations Maintain Strong
Balance Sheet
& Credit Rating
Appropriate Liquidity & Debt Coverage
Prudent Contributions to Pension Plan
Selective Reinvestment
Value Creating-Healthy Spread
Above Cost of Capital
Improving Competitive Position
Effective Capital Spending
Maintenance & Regulatory Needs
High Return, Cost Reduction Projects
15
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
$ B
illio
n
1.7
2.2
1.7 1.7 1.6 1.8
2.1
1.0
0.5
0.8 1.2 1.4
1.2
1.4 $2.7 $2.7 $2.5
$2.9 $3.0 $3.0
$3.5
2008 2009 2010 2011 2012 2013 2014
FCF CapEx
Cash From Operations & Free Cash Flow
16
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Dividend increase
10% increase to $1.76/share
4th consecutive year of double-digit increase
Strengthened dividend policy to 40-50%
of Free Cash Flow
Continued share buybacks
Successfully restructured and extending 2006 timber monetization
Structure moves from full recourse to limited recourse
Assets and liabilities come onto the balance sheet
Tax deferral maintained
Capital spending forecast
2016 plan set at $1.4B, inclusive of NA Industrial Packaging optimization
projects and Riegelwood, NC fluff pulp conversion
Sun JV debt of ~$400MM will be removed from IP’s consolidated
balance sheet in 4Q15
17
Capital Allocation Update
$1.05 $1.20
$1.40
$1.60 $1.76
4Q11 4Q12 4Q13 4Q14 4Q15
Annualized Dividend
Earnings Presentation | Third Quarter 2015 18
Asia Portfolio Decision | Strategic Rationale
Exit manufacturing of coated paperboard and industrial packaging
Sold share of Sun JV to partner
Signed Letter of Intent to sell Asia Industrial Packaging business
(box converting operations)
Continue to serve Asian markets from the U.S. and through our
Ilim JV in Russia
U.S. Key Exports
Fluff Pulp
Kraft Linerboard
Reshaping IP’s approach to serving the important Asian market
JV Key Exports
Market & Tissue Pulp
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015 19
IP Investment Thesis | Why IP Will Outperform
Vision
Leadership position
Attractive markets
Low-cost assets
Generating…
Strong FCF
Returns above cost-of-capital
• Global packaging and paper platforms
• Leadership positions in scale businesses
• Operational excellence
• Operate in key markets where we can grow profitably
ROIC Consistently >WACC FCF Strong Sustainable Improving Capital Allocation
✔ Value Creation
✔ Return Cash to Shareholders
Strategy Shareholder Value
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Appendix Investor Relations Contacts
Jay Royalty 901-419-1731
Michele Vargas 901-419-7287
Media Contact
Tom Ryan 901-419-4333
20
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
$ Million 3Q14 2Q15 3Q15
Cash Provided by Operations
$1,0231 $8652 $837
Less Capital Investment
($327) ($354) ($325)
Free Cash Flow $696 $511 $512
Free Cash Flow
1 Excludes $90MM cash paid for pension plan contribution 2 Excludes $750MM cash paid for pension plan contribution
21
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015 22
Maintenance Outages Expenses | 2015
$ Million 1Q15A 2Q15A 3Q15A 4Q15F 2015F
Industrial Packaging $63 $95 $27 $61 $246
North America 63 93 27 61 244
Brazil 0 2 0 0 2
Printing Papers $33 $63 $32 $36 $164
North America 27 41 15 36 119
Europe 0 22 14 0 36
Brazil 6 0 2 0 8
India 0 0 1 0 1
Consumer Packaging $15 $12 $7 $14 $48
North America 15 10 2 14 41
Europe 0 2 5 0 7
Total Impact $111 $170 $66 $111 $458
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
88 46
118 123
48 93
140 146
72
70
276
60 58
69
53
55
78
Maintenance Market
1
24 24 20
7 18 12
41 13
4 29
19
58
16 20
1
31
13
29
0
North American Downtime
20
2
15 19
12 0
18 15
12
Containerboard Uncoated Papers1
Market Pulp
Th
ou
sa
nd
To
ns
Th
ou
sa
nd
To
ns
Th
ou
sa
nd
To
ns
Th
ou
sa
nd
To
ns
1Courtland shutdown of two machines in 4Q13; entire mill shutdown of four machines complete in February 2014
146
23
150
322
178 181
117
0
48
Coated Paperboard
158
201
31
16
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Special Items Pre-Tax ($ Million) 3Q14 2Q15 3Q15
Industrial Packaging
EMEA Restructuring Costs ($5)
Multi-Employer Pension Plan Exit Liability ($35)
Other ($2)
Printing Papers
Courtland Mill Shutdown ($3)
India Reserve Release $20
Brazil Tax Settlement ($32)
Consumer Pkg.
Riegelwood Repurposing $14 ($7)
Impairment of Sun JV Goodwill & PPE ($186)
Other ($2) ($1) ($1)
Corporate
Debt Extinguishment ($13)
Debt Premium Costs ($207)
Timber Monetization Restructure ($17)
Other ($5) $4
Total Special Items Before Tax ($77) ($190) ($211)
24
Special Items Before Tax | Continuing Operations
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Special Items Net of Taxes
2Q15 3Q15
$ Million EPS $ Million EPS
Earnings Before Special Items and Non-Operating Pension Expense
$409 $0.97 $407 $0.97
Special Items Net of Taxes:
Debt Premium Costs ($133)
Timber Monetization Restructure ($11)
Tax Adjustments ($28)
Riegelwood Repurposing $9 ($4)
Impairment of Sun JV Goodwill & PPE ($125)
Other $1 ($1)
Total Special Items Net of Taxes ($151) ($0.36) ($141) ($0.33)
Non-Operating Pension Expense ($31) ($0.07) ($46) ($0.11)
Net Earnings $227 $0.54 $220 $0.53
25 Earnings Presentation
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Operating Profit $ Million
D & A $ Million
Tons Thousand
EBITDA per Ton
EBITDA Margin
Industrial Packaging
North America1 $554 $169 3,475 $208 25%
Brazil ($4) $4 78 $0 0%
Printing Papers
North America2 $81 $21 491 $208 20%
Europe & Russia3 $24 $13 3024 $123 18%4
Brazil $56 $20 294 $259 35%
India5 ($4) $4 41 $0 0%
North America Pulp $16 $17 339 $97 15%
Consumer Packaging
North America6 $30 $45 371 $202 15%
Europe $20 $3 96 $240 29%
Segment operating profit before special items 1 Includes Corrugated Packaging, Saturating Kraft & Bag businesses, Gypsum & Release Kraft business; excludes Recycling business and revenue from trade volumes
2 Includes Bleached Kraft business 3 Uncoated Papers (excludes Pulp)
4 Excludes Joint Marketing Agreement (JMA) sales
5 Includes adjustment for minority ownership share 6 Includes Foodservice business
3Q15 EBITDA | Integrated Mill Business Margins
26
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Operating Profits by Industry Segment | Continuing Operations
$ Million 3Q14 2Q15 3Q15
Industrial Packaging $569 $528 $553
Printing Papers $192 $101 $179
Consumer Packaging $79 $34 $41
Operating Profit $840 $663 $773
Net Interest Expense ($152) ($144) ($141)
Noncontrolling Interest / Equity Earnings Adjustment ($2) ($5) ($6)
Corporate Items ($3) ($8) ($10)
Non-Operating Pension Expense ($54) ($50) ($76)
Special Items ($77) ($190) ($211)
Net Earnings from continuing operations before income taxes, equity earnings & noncontrolling interest $552 $266 $329
Equity Earnings(Loss), net of taxes – Ilim ($70) $67 ($9)
27
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Geographic Business Segment Operating Results
$ Million Sales Operating Profit
3Q14 2Q15 3Q15 3Q14 2Q15 3Q15
Industrial Packaging
North America $3,210 $3,205 $3,175 $570 $533 $557
Europe $310 $277 $262 $4 $4 $1
Brazil $88 $63 $55 ($2) ($7) ($4)
Asia $146 $149 $150 ($3) ($2) ($1)
Printing Papers
North America $529 $471 $500 $75 $31 $81
Europe $365 $312 $284 $44 $20 $30
Brazil $266 $210 $219 $58 $35 $56
India / Asia $58 $45 $39 ($5) ($3) ($4)
N.A. Pulp $235 $211 $216 $20 $18 $16
Consumer Packaging
North America $528 $500 $494 $52 $27 $30
Europe $94 $75 $80 $27 $16 $20
Asia (Sun JV) $254 $222 $235 $0 ($9) ($9)
Does not reflect total company sales
28
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
2015 Operating Earnings
Pre-Tax $MM
Tax $MM
Non-controlling
Interest $MM
Equity Earnings
Net Income $MM
Average Shares
MM
Diluted EPS1
Operating Earnings
1Q15 $478 ($158) $2 $35 $357 424 $0.84
2Q15 $506 ($168) $9 $62 $409 422 $0.97
3Q15 $616 ($206) $10 ($13) $407 418 $0.97
Non-Operating Pension Expense
1Q15 ($72) $28 $0 $0 ($44) 424 ($0.10)
2Q15 ($50) $19 $0 $0 ($31) 422 ($0.07)
3Q15 ($76) $30 $0 $0 ($46) 418 ($0.11)
Net Special Items
1Q15 $0 $0 $0 $0 $0 424 $0.00
2Q15 ($190) $39 $0 $0 ($151) 422 ($0.36)
3Q15 ($211) $70 $0 $0 ($141) 418 ($0.33)
Net Earnings from Continuing Operations
1Q15 $406 ($130) $2 $35 $313 424 $0.74
2Q15 $266 ($110) $9 $62 $227 422 $0.54
3Q15 $329 ($106) $10 ($13) $220 418 $0.53
1 A reconciliation to GAAP EPS is available at www.internationalpaper.com under the Investors tab at Webcasts and Presentations
29
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Operating Business EPS
2005-2006 as originally reported
2007-2011 adjusted for elimination of the Ilim JV reporting lag
2005-2010 Net Earnings from continuing operations and before special items; 2010 onward reflects Operating Earnings
xpedx is reflected as a Discontinued Operation from 2010 forward.
30
.36 .31
.29
.12 .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
.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
2005 2006 2007 2010 2008
Impact of Mineral
Rights Gain
2009
.83
2011
.93
Final Land Sale
2012 2013 2014 2015
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
.95 .97 (.14)
(.02) (.05) .01 .06 .02
.14
3Q14 Price / Mix Volume Operations & Costs
Maintenance Outages
Input Costs Other Ilim JV 3Q15
31
3Q15 vs. 3Q14 EPS
Operating Earnings
Operations .10
FX .04
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
569 553
(46)
(3) 3 30
3Q14 Price / Mix Volume Operations & Costs
Maintenance Outages
Input Costs 3Q15
0
32
Industrial Packaging | 3Q15 vs. 3Q14 $
Mill
ion
Segment operating profit before special items
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
3Q15 vs. 2Q15 3Q15 vs. 3Q14
Business Volume Price / Mix
per Ton Volume
Price / Mix per Ton
N.A. Container1 (2%) ($4) ~Flat ($12)
European Container (5%) €13 2% €7
Average IP volume and price realization (includes the impact of mix across all segments) 1 Corrugator plant sales on FBA shipping day basis
Industrial Packaging | Volume and Pricing Trends
33
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
NA Industrial Packaging Relative EBITDA Margins
1 Trailing twelve months 2 RockTenn margins prior to 3Q15
IP EBITDA margins based on North American Industrial Packaging operating profit before special items
Excludes the Recycling Business and revenue from trade volumes
Competitor EBITDA margin estimates obtained from public filings and IP analysis
25.5%
21.3% 20.8%
24.1%
22.2%
19.4%
25.2%
22.4%
IP PCA WestRock
3Q14 2Q15 3Q15
21.3%
TTM1
TTM1
34
WRK
reports
11/5/15
23.7%
2
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
79
41
(14)
(10)
(11)
(7) (5) 9
3Q14 Price / Mix Volume Operations & Costs
Maintenance Outages
Input Costs Other 3Q15
35
Consumer Packaging | 3Q15 vs. 3Q14 $
Mill
ion
Segment operating profit before special items
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Average IP price realization (includes the impact of mix across all grades)
3Q15 vs. 2Q15 3Q15 vs. 3Q14
Volume Price / Mix
per Ton Volume
Price / Mix per Ton
NA Coated Paperboard 2% ($12) (8%) ($19)
Revenue Revenue
Foodservice (1%) 2%
Consumer Packaging | Volume and Pricing Trends
36
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
NA Consumer Packaging EBITDA Margins
1 Trailing twelve months
IP EBITDA margins based on North American Consumer Packaging operating profit before special items
18.6%
14.4% 15.2%
IP
3Q14 2Q15 3Q15
37
14.5%
TTM1
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
192
179
(28)
(3)
(18)
(2)
14 24
3Q14 Price / Mix Volume Operations & Costs
Maintenance Outages
Input Costs FX / Other 3Q15
38
Printing Papers | 3Q15 vs. 3Q14 $
Mill
ion
Segment operating profit before special items
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
3Q15 vs. 2Q15 3Q15 vs. 3Q14
Business Volume Price / Mix
per Ton Volume
Price / Mix per Ton
NA Paper 7% ($12) (4%) ($15)
NA Pulp1 3% ($8) (5%) ($28)
European Paper2 (6%) €5 (1%) (€10)
Average IP volume and price realization (includes the impact of mix across all grades) 1 Reflects Fluff and Market Pulp combined 2 Excludes Russia
Printing Papers | Volume and Pricing Trends
39
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
NA Papers & Pulp Relative EBITDA Margins
17.9%
14.5%
12.3% 11.0%
18.9%
IP Domtar
3Q14 2Q15 3Q15
1 Trailing twelve months
IP EBITDA margins based on operating profit from continuing operations before special items
Competitor EBITDA margin estimates obtained from public filings and IP analysis
14.1%
TTM1
40
UFS
reports
10/30/15
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
$ Million 3Q14 2Q15 3Q15
Sales $266 $210 $219
Earnings $58 $35 $56
EBITDA Margin 33% 28% 35%
3Q15 vs. 2Q15 3Q15 vs. 3Q14
Uncoated Freesheet Volume Price / Mix
per Ton Volume
Price / Mix per Ton
Domestic (BRL) 31% R$12 Flat R$134
Export (USD) 4% ($9) 11% ($73)
Segment operating profit before special items
IP Brazil results are reported in the Printing Papers segment
Average IP Brazil price realization (includes the impact of mix across all grades)
Printing Papers | IP Brazil
41
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
2009 2010 2011 2012 2013 2014
Sales Volume (Million short tons) 2.6 2.8 2.8 2.9 2.7 3.2
Sales ($B) 1.3 1.9 2.2 2.0 1.9 2.1
Debt ($B) 0.4 0.5 0.9 1.2 1.5 1.4
Operating EBITDA ($MM) 197 516 591 291 208 470
F/X Gain (loss)1 (35) 12 (60) 39 (80) (684)
EBITDA ($MM) 163 528 531 330 128 (214)
Depreciation ($MM) 120 121 124 134 177 193
EBIT ($MM) 43 407 406 196 (49) (408)
Interest Expense ($MM) 28 18 7 6 39 69
Net Income (loss) ($MM) (19) 266 299 132 (72) (362)
IP Equity Earnings (loss) ($MM) (27) 103 134 56 (46) (194)
Dividends (to IP) ($MM) 50 34 85 0 0 56
Ilim JV results are IFRS basis.
IP Equity Earnings (loss) on US GAAP basis. 1Represents F/X impact primarily related to Ilim JV USD-denominated net debt (balance of ~$1.3B at year end 2014)
42
Ilim Joint Venture | Full Year Financials
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Ilim Joint Venture | Volume and Pricing Trends
3Q15 vs. 2Q15 3Q15 vs. 3Q14
Business Volume Price / Mix
per Ton Volume
Price / Mix per Ton
Pulp (2%) ($2) 10% ($41)
Average Ilim JV (100%) volume and price realization (includes the impact of mix across all grades and destinations)
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Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
Total Cash Cost Components | 3Q15 YTD
Fiber 33%
Materials 15%
Freight 15%
Labor 12%
Overhead 9%
Energy 8%
Chemicals 8%
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North American mills only
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
($9)
($9)
($1)
($4)
Fiber Energy Chemicals Freight
North America Outside North America
($21)
($2) $0
Industrial Packaging
Printing Papers
Consumer Packaging
Energy Wood Chemicals Freight OCC
By Business By Input Type
Input costs ($MM) for continuing businesses
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Global Input Costs vs. 2Q15 | $23MM Unfavorable, or $0.04/Share
OCC
Wood
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
($13)
$20
$14 $16
Fiber Energy Chemicals Freight
North America Outside North America
$30
($2)
$9
Industrial Packaging
Printing Papers
Consumer Packaging
Energy Wood Chemicals Freight OCC
By Business By Input Type
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Global Input Costs vs. 3Q14 | $37MM Favorable, or $0.06/Share
OCC
Wood
Input costs ($MM) for continuing businesses
Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
2007 2008 2009 2010 2011 90
95
100
105
110
115
120
125
130
2012 2013 2014 2015
U.S. Mill Wood Delivered Cost Trend | 1% Decrease vs. 2Q15 Average Cost
Cost Indexed to January 2007 values
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Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
2007 2008 2009 2010 2011 40
60
80
100
120
140
160
180
200
2012 2013 2014 2015
Cost Indexed to January 2007 values
U.S. OCC Delivered Cost Trend | 10% Increase vs. 2Q15 Average Cost
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Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
2007 2008 2009 2010 2011 0
50
100
150
200
250
2012 2013 2014 2015
NYMEX Natural Gas closing prices
Natural Gas Costs Trend | 2% Increase vs. 2Q15 Average Cost
Cost Indexed to January 2007 values
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Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
2007 2008 2009 2010 2011 40
90
140
190
240
290
340
2012 2013 2014 2015
U.S. Fuel Oil Trend | 19% Decrease vs. 2Q15 Average Cost
Cost Indexed to January 2007 values
WTI Crude prices
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Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
2007 2008 2009 2010 2011 75
100
125
150
175
200
2012 2013 2014 2015
U.S. Chemical Composite Index Trend | 1% Decrease vs. 2Q15 Average Cost
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
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Earnings Presentation | Third Quarter 2015 Earnings Presentation | Third Quarter 2015
2015 Global Consumption | Annual Purchase Estimates for Key Inputs
Commodity U. S. Non – U. S.
Energy
Natural Gas (MM BTUs) 69,000,000 11,000,000
Fuel Oil (Barrels) 700,000 380,000
Coal (Tons) 350,000 640,000
Fiber Wood (Tons) 52,000,000 8,000,000
Old Corrugated Containers / DLK (Tons) 4,600,000 630,000
Chemicals
Caustic Soda (Tons) 350,000 80,000
Starch (Tons) 390,000 100,000
Sodium Chlorate (Tons) 160,000 57,000
LD Polyethylene (Tons) 37,000 -
Latex (Tons) 20,000 11,000
Does not include Asia or volume consumed by joint ventures (Sun JV, Ilim JV) Estimates are based on normal operations and may be impacted by downtime
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