Executive Summary

Q2 2025 net sales were $6.77B, up 14.7% q/q and 43% y/y; adjusted operating EPS was $0.20 versus $0.23 in Q1 and $0.55 in Q2 2024. GAAP diluted EPS was $0.14 .
Versus S&P Global consensus, revenue modestly beat ($6.70B* estimate vs $6.77B actual; +1.0%), while adjusted EPS materially missed ($0.409* estimate vs $0.20 actual). Bold miss driven by cost headwinds, heavier outages, and EMEA softness .
Management expects a significant sequential earnings ramp in Q3 driven by higher volumes, cost-out, fewer outages, and incremental price realization (price/mix +$25M, volume +$24M, cost-out +$8M, input costs +$10M; PS NA incremental +$10M from price indices) .
Strategic progress continued: full-quarter DS Smith consolidation; divestiture of five European plants (EC remedy); continued footprint actions in NA; exploration of a Salt Lake City facility; Waterloo, IA greenfield underway. These actions aim to secure advantaged cost and customer experience .
Stock reaction catalysts: EPS miss versus consensus, clear Q3 ramp roadmap, EMEA price realization expectations, and ongoing portfolio moves (including announced GCF sale after Q2 close timing) .

What Went Well and What Went Wrong

What Went Well

Full-quarter consolidation of DS Smith lifted net sales to $6.77B; adjusted operating earnings rose to $105M despite macro softness .
Commercial execution improved in North America: on-time delivery rose to 97%, gap to industry narrowed by ~200 bps in Q2, with confirmed strategic wins expected to ramp in H2 .
Free cash flow turned positive at $54M in Q2 (vs -$618M in Q1) as transformation costs and incentive payouts rolled off; management reiterated full-year FCF outlook of $100–$300M .

Quote: “Our second quarter results reflect a full quarter of our combined… packaging businesses… We have exceeded our expectations on commercial actions and are on target to achieve cost-out actions before the end of year.” — CEO Andy Silvernail .

What Went Wrong

Adjusted EPS fell to $0.20 (from $0.23 in Q1) amid heavier maintenance outages, non-recurring costs, and EMEA demand softness; EMEA segment swung to a $(1)M operating loss .
North American mill reliability issues left about $150M of profit “on the table” YTD; management emphasized accelerated reliability investments and footprint optimization to address this .
EMEA faced spikes in fiber costs and higher D&A from purchase accounting; volume was softer than anticipated (though June/July showed early recovery signs) .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$4.58	$5.90	$6.77
GAAP Diluted EPS ($)	$(0.42)	$(0.24)	$0.14
Adjusted Operating EPS ($)	$(0.02)	$0.23	$0.20
Net Income ($USD Millions)	$(147)	$(105)	$75
Net Income Margin (%)	−3.21%	−1.78%	1.11%

Results vs Estimates (Q2 2025):

Metric	Actual	Consensus*	Surprise
Revenue ($USD Billions)	$6.77	$6.70*	+1.0%
Adjusted EPS ($)	$0.20	$0.409*	−$0.209 (miss)

Segment performance:

Segment	Q2 2024 Net Sales ($MM)	Q1 2025 Net Sales ($MM)	Q2 2025 Net Sales ($MM)	Q2 2024 Op. Profit ($MM)	Q1 2025 Op. Profit ($MM)	Q2 2025 Op. Profit ($MM)
Packaging Solutions NA	3,628	3,702	3,860	281	142	277
Packaging Solutions EMEA	328	1,550	2,291	10	46	(1)
Global Cellulose Fibers	717	643	628	31	17	(4)
Corporate & Inter-segment	61	6	(12)	—	—	—

KPIs:

KPI	Q4 2024	Q1 2025	Q2 2025
Cash from Operations ($MM)	397	(288)	476
Capital Expenditures ($MM)	251	330	422
Free Cash Flow ($MM)	137	(618)	54
Cash & Temporary Investments ($MM)	1,170 (Dec 31)	1,156 (Mar 31)	1,135 (Jun 30)

Notes: Adjusted Operating EPS and Free Cash Flow are non-GAAP metrics; reconciliations provided in filings .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Free Cash Flow ($)	FY 2025	$100–$300M (Investor Day/Q1)	$100–$300M reiterated	Maintained
Earnings drivers	Q3 2025	n/a	Price/mix +$25M; volume +$24M; cost-out +$8M; input costs +$10M	New detail
PS NA price realization	Q3 2025	n/a	+$10M incremental from prior index moves	New detail
Maintenance outages	Q3 2025	Heaviest in Q2	Fewer outages expected	Lowered outages
EBITDA run-rate (ex GCF)	H2 2025	~third-quarter $1B run-rate EBITDA for company; PS EMEA range held	~$3.8B adjusted EBITDA run-rate in second half excluding GCF	Clarified trajectory
EMEA pricing	H2 2025	First increase expected to stick; cautious on second	First increase embedded; second not assumed	Maintained caution
Dividend	Q3 2025	Prior quarterly cadence	Declared $0.4625/share on July 22, payable Sept 16	Confirmed dividend

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024)	Previous Mentions (Q1 2025)	Current Period (Q2 2025)	Trend
80/20 transformation & lighthouses	Scaling pilots; targeting 22 plants in 2025; focus on cost-out and commercial excellence	Deployment across NA; run-rate targets; closing gap to market	Momentum building; 40 plants installed; nearing $600M cost-out run-rate by year-end	Accelerating
Mill reliability	Identified ~$350M drag; underspend over time; plan to invest and optimize	Strategic focus; outage timing; reliability improvements in GCF	~$150M YTD profit left; hyper-focus to improve; specific actions underway	Improving but still a headwind
EMEA demand & pricing	EC remedy (divest 5 plants) pending; price hikes emerging	Soft demand; first price increase expected to stick; second cautious	Softer demand in Q2; fiber cost spike; June/July improving; first price increase embedded; second not assumed	Stabilizing with caution
Tariffs/macro	Anticipated volatility; planning scenarios	Demand down ~2%; prepared to accelerate cost-out if needed	Macro uncertainty persists; “goods economy” soft; upside if tensions ease	Mixed
Footprint optimization	Q4 closures (Georgetown mill; 5 box plants); Waterloo greenfield announced	DS Smith integration; asset sales; optimization continues	Additional closures/exits in NA; divestiture of 5 EU plants completed July 1	Ongoing
GCF strategic review	Non-core volatility; evaluating options	Active process; timeline intact	Goal to close by year-end (affirmed on Q2 call)	Advancing

Management Commentary

“Our transformation is on track… we are holding our 2025 EBITDA guidance… momentum is picking up.” — CEO Andy Silvernail .
“We expect stronger global revenue and earnings in the third quarter… confirmed strategic wins… continued progress on cost-out… fewer planned maintenance outages.” — CEO .
“Operations and costs were unfavorable by $0.32 per share… outages were unfavorable by $0.16… input costs were favorable by $0.10… depreciation favorable by $0.18.” — CFO Lance Loeffler on Q2 EPS bridge .
“Year to date, we have left about $150 million of profit on the table due to reliability issues… we are hyper-focused on this area for improvement.” — CEO .
“On-time delivery improved… 92% in Q4 last year to 97% in Q2… we reduced our volume gap to market by 200 basis points.” — CFO/CEO .

Q&A Highlights

Mill reliability: Management detailed underinvestment and personnel turnover as root causes; committed to targeted capex and consistent execution, recognizing ~$300M annualized opportunity tied to reliability and productivity .
NA vs EMEA outlook: More controllable in North America (commercial execution, converting ops, 80/20 already advanced), while EMEA is more commercially driven with macro variability; EMEA EBITDA range from Investor Day “held” .
Demand and box volumes: Market relatively flat sequentially; cautious on restocking; closing the NA industry gap by Q4 anchored by large national and local account wins based on service/quality .
Pricing: PS NA expects incremental price realization (+$10M) in Q3; EMEA first price increase embedded, second not assumed given market weakness .
GCF timeline: Goal to close process by year-end reaffirmed .

Estimates Context

Q2 2025 revenue beat: $6.77B actual vs $6.70B* consensus; +1.0% surprise .
Q2 2025 adjusted EPS miss: $0.20 actual vs $0.409* consensus; −$0.209 surprise, driven by outages, non-recurring costs, and EMEA softness .
Forward consensus*: Q3 2025 revenue $6.17B*, EPS $0.589*; Q4 2025 revenue $5.92B*, EPS $0.268* (management guides sequential Q3 improvement via price/mix, volume, cost-out, and input costs) .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Revenue momentum with DS Smith consolidation and NA commercial execution offset EMEA softness; Q3 guidance implies a clear sequential earnings ramp via price/mix, volume, cost-out, and fewer outages .
Bold EPS miss versus consensus reflects heavy outages and non-recurring costs; monitoring Q3 operational execution is critical to thesis .
NA packaging execution is improving (97% on-time delivery; narrowing gap to industry), supporting share stabilization and growth into H2 .
EMEA remains mixed: price realization from the first increase expected, but macro softness and purchase accounting D&A elevate risk; watch fiber/energy costs and volume recovery .
Cash generation inflecting: Q2 FCF positive; full-year FCF $100–$300M reiterated despite transformation investments .
Structural actions (closures/exits, Waterloo greenfield, Salt Lake City exploration, EU divestitures) align with advantaged cost and customer focus; execution and timing are key .
Near-term catalysts: Q3 operational delivery on the ramp, NA mill reliability improvements, EMEA demand/pricing trajectory, and progress on GCF sale (target year-end close) .

Additional Relevant Press Releases (Q2 2025 window)

Completed divestiture of five European plants to satisfy EC remedy (France, Spain, Portugal) .
Announced strategic changes to support growth in NA: exit molded fiber, select closures/sales in U.S./Mexico .
Exploration of Salt Lake City packaging facility ; Groundbreaking for Waterloo, IA greenfield box plant .
Q1 2025 results release (baseline prior quarter data) .

INTERNATIONAL PAPER CO /NEW/ (IP)·Q2 2025 Earnings Summary