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INTERNATIONAL PAPER CO /NEW/ (IP)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue modestly beat consensus while EPS materially missed: Net sales were $6.22B vs $6.17B consensus; Adjusted Operating EPS was $(0.43) vs $0.59 expected, driven primarily by $675M of accelerated depreciation tied to mill closures and strategic actions. Bold: Revenue beat; EPS miss due to accelerated depreciation * *.
  • Adjusted EBITDA from continuing operations was $859M; total adjusted EBITDA including discontinued operations was $1.01B, reflecting sequential improvement and transformation progress, though comparability to consensus depends on EBITDA definition. Bold: Adjusted EBITDA improved 28% sequentially across Packaging Solutions .
  • Guidance reset: FY2025 net sales updated to $24B, adjusted EBITDA to ~$3B, and free cash flow to negative $100M to positive $300M; prior FCF guide of +$100M to +$300M was cut due to market softness. Bold: FY2025 guide lowered; FCF range reduced .
  • Structural actions accelerated: announced sale of the Global Cellulose Fibers (GCF) business to AIP, closure of Savannah and Riceboro mills and Savannah box plant, and $250M Riverdale mill conversion investment; dividend declared $0.4625 for the quarter. Bold: Portfolio reshape and footprint optimization are key catalysts .

What Went Well and What Went Wrong

  • What Went Well

    • “We delivered 28% sequential adjusted EBITDA improvement across both Packaging Solutions businesses, driven by price realization, cost management and lower fiber costs.” — CEO Andy Silvernail .
    • North America box shipments turned positive in September and continued into October, supporting market share gains into Q4 and 2026 .
    • Adjusted EBITDA from continuing operations reached $859M (total adjusted EBITDA $1.01B), in line with internal expectations; operating cash flow improved to $605M with FCF of $150M .

  • What Went Wrong

    • EPS missed consensus materially: Adjusted Operating EPS $(0.43) vs $0.59 consensus; accelerated depreciation of $675M impacted EPS by $0.81 in the quarter Bold: EPS miss tied to accelerated D&A * *.
    • EMEA remained soft with price index declines and destocking; PS EMEA segment operating loss widened to $(58)M vs $(1)M in Q2 .
    • Market headwinds (volume and price softness) caused FY2025 target reductions and FCF guidance cut from positive to a potential negative range .

Financial Results

MetricQ3 2024Q2 2025Q3 2025Q3 2025 Consensus
Net Sales ($USD Billions)$3.979 $6.767 $6.222 $6.167*
Adjusted Operating EPS ($)$0.33 $0.20 $(0.43) $0.589*
Earnings (Loss) from Continuing Ops ($USD Millions)$111 $75 $(426) —
Adjusted EBITDA from Continuing Ops ($USD Millions)$366 $670 $859 $896*
Cash from Operations ($USD Millions)$521 $476 $605 —
Free Cash Flow ($USD Millions)$309 $54 $150 —

Note: Consensus values (asterisked) are from S&P Global; definitions may differ (e.g., EBITDA) — Values retrieved from S&P Global.

Segment Performance

Segment Metric ($USD Millions)Q3 2024Q2 2025Q3 2025
PS North America Net Sales$3,640 $3,860 $3,898
PS North America Operating Profit (Loss)$190 $277 $(166)
PS EMEA Net Sales$322 $2,291 $2,310
PS EMEA Operating Profit (Loss)$7 $(1) $(58)

KPIs

KPIQ3 2024Q2 2025Q3 2025
NA Box Shipments (YoY, select month)——+1% YoY in September
Accelerated Depreciation ($USD Millions)——$675 (impacting EPS by $0.81)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Billions)FY 2025—$24 New/Set
Adjusted EBITDA ($USD Billions)FY 2025$3.5–4.0 (Q1 commentary) ~$3.0 Lowered
Free Cash Flow ($USD Millions)FY 2025+$100 to +$300 $(100) to +$300 Lowered range, possibly negative
NA Packaging Adjusted EBITDA ($USD Millions)Q4 2025—~ $600 New
EMEA Packaging Adjusted EBITDA ($USD Millions)Q4 2025—~ $230 New
Dividend per share ($)Q4 2025—$0.4625 declared Maintained/Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
80/20 and cost-outFramework launched; targeting $1.9B cost-out by 2027 Accelerating footprint optimization; nearing $600M run-rate by YE Aggressively executing closures/outsourcing and overhead delayering Accelerating
NA box shipments/market sharePlan to close gap to market by Q4 Gap reduced; expect parity and wins in H2 Positive shipments in Sept/Oct; expect outperformance in Q4 and 2026 Improving
EMEA demand/pricingExpect modest H2 improvement; caution on second price hike Soft demand; fiber spike; price index variability Soft demand, destocking; sequential EBITDA margin expansion; price index declines Challenged
Mill reliability/capexIdentified reliability drag; plan steady reinvestment $150M profit left YTD due to reliability; pushing investments Reliability issues persist; deploying capital; Riverdale conversion Work-in-progress
Portfolio reshapingConsidering GCF divestiture Review progressing Signed GCF sale to AIP; bag business divestiture Executed

Management Commentary

  • “We delivered 28% sequential adjusted EBITDA improvement across both Packaging Solutions businesses, driven by price realization, cost management and lower fiber costs.” — Andy Silvernail, CEO .
  • “Despite near-term headwinds, we remain confident in our trajectory… delivering commercial excellence, securing an advantaged cost position, and building a differentiated, sustainable global packaging company.” — Andy Silvernail .
  • CFO: Identified ~$60M annual stranded overhead post-GCF divestiture with TSA coverage and elimination plan; GCF impairment ~$1B recorded in discontinued ops .

Q&A Highlights

  • EMEA vs NA: Cost opportunities differ; EMEA has excess box capacity and complex above-country structure targeted for delayering; commercial focus to key accounts rather than repricing under-market contracts (NA issue last year) .
  • NA volume and outlook: Above-market performance expected in Q4 and 2026; local and national wins underpin trajectory; target ~2% outperformance vs market in 2026 .
  • Riverdale investment: ~$250M conversion to lightweight containerboard with ~20% targeted returns; redeployment after Savannah decision avoided a $300M capital call .
  • Integration rate: ~90% of NA containerboard production to be consumed internally post-closures; export ~6–7% maintained for strategic customers .
  • Free cash flow reset: ~>$500M profit lost in 2025 due to volume/price softness; incremental $50–$100M transformation spend vs plan; decision to maintain transformation pace and capex despite macro .

Estimates Context

  • Revenue: Actual $6.22B vs $6.17B consensus — beat by ~$$0.06B *.
  • EPS: Adjusted Operating EPS $(0.43) vs $0.59 consensus — miss by ~$1.02; management attributes ~$0.81 of EPS impact to accelerated depreciation from mill closures and 80/20 actions * .
  • EBITDA: Company-reported adjusted EBITDA from continuing operations was $859M; consensus EBITDA was ~$896M, but SPGI’s “actual” EBITDA (unadjusted) prints ~$248M — definitions differ; investors should use company-reported adjusted EBITDA for transformation tracking * *.
    Values with asterisk are retrieved from S&P Global.

Where estimates may need to adjust:

  • EPS paths likely revised lower short term due to non-cash D&A step-up effects from restructuring; medium-term EBITDA trajectory supported by cost-out carryover ($~500M to 2026) and commercial wins, but EMEA softness introduces uncertainty .

Key Takeaways for Investors

  • Revenue beat but EPS miss reflects non-cash accelerated depreciation; underlying cash generation improved QoQ with $605M CFO and $150M FCF — focus on adjusted EBITDA and cash metrics for near-term valuation anchors .
  • FY2025 guide reset (net sales $24B, EBITDA ~$3B, FCF −$100M to +$300M) resets expectations; watch Q4 segment EBITDA targets (NA ~$600M; EMEA ~$230M) as near-term performance catalysts .
  • Transformation execution is tangible: mill closures (Savannah, Riceboro), bags divestiture, IT outsourcing, and Riverdale conversion should structurally lift margins in 2026; monitor stranded cost elimination post-GCF .
  • EMEA is the swing factor; destocking and price index declines weighed on Q3; works council consultations and footprint actions are critical for 2026 uplift .
  • Dividend maintained ($0.4625), signaling confidence in liquidity and balance sheet while executing portfolio reshape; sale of GCF to AIP supports deleveraging and reinvestment in core packaging .
  • Near-term trading: Expect sensitivity to Q4 execution vs guidance and any updates on EMEA pricing; medium-term thesis depends on 80/20 cost-out, NA market share gains, and DS Smith synergies flowing through in 2026–2027 .

Citations:
Press release and 8-K:
Earnings call (Q3):
Prior quarters:
Strategic/dividend press:
Estimates: S&P Global (asterisked values).