Earnings call transcript: International Paper misses Q3 2025 forecasts, stock drops

International Paper (IP) reported disappointing third-quarter 2025 results, missing earnings and revenue forecasts. The company’s earnings per share (EPS) came in at a loss of $0.43, significantly below the forecasted profit of $0.55. Revenue was $6.22 billion, falling short of the anticipated $6.46 billion. Following the release, International Paper’s stock fell by 12.37% to $42.50 in pre-market trading.

Key Takeaways

• International Paper reported a larger-than-expected loss in Q3 2025.
• Revenue and EPS both missed analyst expectations.
• The stock price dropped over 12% in pre-market trading.
• The company is focusing on transforming into a sustainable packaging business.
• Revised full-year 2025 targets include $24 billion in net sales and $3 billion in adjusted EBITDA.

Company Performance

International Paper’s Q3 2025 performance showed a significant deviation from both analyst expectations and its historical trends. Despite an improvement in EBITDA and margin expansion, the company faced challenges that led to a substantial earnings miss. The transition towards sustainable packaging and ongoing restructuring efforts are central to its strategic direction.

Financial Highlights

• Revenue: $6.22 billion, down from the forecast of $6.46 billion
• Earnings per share: -$0.43, missed the forecast of $0.55
• EBITDA: Over $1 billion, with a 28% improvement
• Free cash flow: Increased to $150 million

Earnings vs. Forecast

International Paper’s Q3 2025 results fell short of forecasts, with an EPS surprise of -178.18% and a revenue surprise of -3.72%. This marked a significant departure from previous quarters, where performance was more aligned with expectations. The miss highlights challenges in achieving profitability amidst ongoing strategic shifts.

Market Reaction

In response to the earnings miss, International Paper’s stock dropped by 12.37%, falling to $42.50 in pre-market trading. This decline places the stock closer to its 52-week low of $38.61, reflecting investor concerns over the company’s ability to meet financial targets.

Outlook & Guidance

Looking forward, International Paper has revised its full-year 2025 targets, projecting net sales of $24 billion and adjusted EBITDA of $3 billion. The company is also targeting $5 billion in EBITDA by 2027, as it continues to focus on transforming its business model and capturing market opportunities.

Executive Commentary

CEO Andy Silvernail emphasized the company’s progress, stating, "We are making significant, measurable progress on our transformation." He also highlighted the strategic traction, noting, "Our strategy is getting traction," and underscored the focus on controllable factors: "We are focused on what we can control."

Risks and Challenges

• Macroeconomic pressures in North America and EMEA could impact demand.
• Transitioning to sustainable packaging involves significant restructuring costs.
• Market softness in Europe and North America may affect revenue growth.
• Ongoing mill closures and business divestitures could disrupt operations.
• Achieving projected EBITDA targets requires successful execution of strategic initiatives.

Q&A

During the earnings call, analysts queried the financial impact of mill closures and the challenges in the European market. Executives addressed the company’s transformation strategy and responses to market softness, providing insights into their strategic priorities and operational adjustments.

Full transcript - International Paper (IP) Q3 2025:

Krista, Call Operator: Good morning and thank you for standing by. Welcome to International Paper Company’s third quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, you will have an opportunity to ask questions. To ask a question, press star one on your telephone keypad. To withdraw your question, press star one again. As a reminder to ask a question, press star one. To withdraw your question, press star one again. It is now my pleasure to turn the call over to Mandi Gilliland, Senior Director of Investor Relations. Ma’am, the floor is yours.

Mandi Gilliland, Senior Director of Investor Relations, International Paper Company: Thank you, Krista. Good morning and good afternoon and thank you for joining International Paper Company’s third quarter 2025 earnings call. Our speakers this morning are Andy Silvernail, Chairman and Chief Executive Officer, and Lance Loeffler, Senior Vice President and Chief Financial Officer. There is important information at the beginning of our presentation, including certain legal disclaimers. For example, during the call we will make forward-looking statements that are subject to risks and uncertainties. These and other factors that could cause or contribute to actual results differing materially from such forward-looking statements can be found in our press releases and reports filed with the U.S. Securities and Exchange Commission. We will also present certain non-U.S. GAAP financial information. A reconciliation of those figures to U.S. GAAP financial measures is available on our website.

Beginning this quarter, management has elected to present forward-looking guidance based on adjusted EBITDA rather than adjusted EBIT. This change reflects our views that adjusted EBITDA provides a better comparative metric to use during the company’s transformation. Our website also contains copies of the third quarter earnings press release and today’s presentation slides. I will now turn the call over to Andy Silvernail.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Thanks Mandi. Good morning and good afternoon everyone. Let’s begin on slide three. As we go through today’s presentation, there are three key messages I want you to take away. First, we’re making significant, measurable progress on our transformation. Our strategy is getting traction. Second, macro conditions in North America and EMEA continue to be challenging. Third, we’re focused on what we can control. We’re moving aggressively on cost initiatives to enable margin expansion and continued investment in our success. This quarter represents an important step on our transformational journey as we continue to execute the strategy we launched last year. We committed to an ambitious transformation plan to reinforce our leadership in sustainable packaging solutions through an advanced cost position and high relative supply position in our most strategically attractive markets and delivering an unmatched customer experience.

Our strategy is rooted in 80/20 which has four elements: Simplify, Segment, Resource, and Grow. In that spirit, over the course of this year we have announced several targeted actions. We are simplifying our organization by exiting select businesses, markets, and functions to sharpen our focus and liberate resources. Post the Global Cellulose Fibers sale and the exit of some specialty businesses and low margin export, we will be exclusively a sustainable packaging business. This is a major milestone on transformation. A key step of segmentation is the rollout of our Lighthouse model which has accelerated across the North American box system and continues to gain traction in our mill system and we are now kicking this off in EMEA. We are directing our resources, namely people and capital, toward our most advantaged opportunities to drive higher reliability and productivity. For example, we made the decision to close Savannah.

We redeployed approximately 30 people to Riverdale and avoided a $300 million capital call which allowed us to fund our Riverdale conversion to lightweight containerboard. These actions contribute to a stronger business for our customers, employees, and shareholders which is reflected in our EBITDA improvement. Now moving to slide four. We are well on our way in our transformation journey and are pulling multiple levers with many moving parts across North America and EMEA. Several drive immediate benefits and you’ll see those in our numbers now. Others are medium and long term benefits that come with near term financial offsets, facility closures, overhead reduction, and refocusing. Our commercial efforts will have multiple short term puts and takes. During this call, we want to ensure that we describe the key components of our transformation.

The main takeaway is that our underlying earnings are growing significantly, and we are confident in our strategy to deliver profitable growth over the long term. It’s important to recognize that North America and EMEA are at different stages of the transformation journey and operate in very different markets, which creates unique opportunities and challenges for each business. In North America, we’re seeing significant benefits of the actions taken to date, and despite short term market offsets, giving us conviction that we’re on the right path. In EMEA, we are early in the process of optimizing our footprint, reducing overhead costs, and reinvesting in strategic priorities. Despite macro headwinds, we are making progress and have a clear path forward to drive improvements. I’m on slide 5 as we consider our journey and how much is left to accomplish.

I want to anchor us in the progress we’ve made today, utilizing North America as a transformation proof point. This slide shows how we can drive results in a tough market while investing to win. In North America, we have delivered a 40% increase in adjusted EBITDA year to date compared to the same period in 2024, while expanding adjusted EBITDA margin by 370 basis points. Our strong performance year to date has been the result of several cost and commercial drivers. In terms of cost improvement, we continued our footprint optimization in North America. We closed additional mills and box plants, sold or exited some of our non-strategic export and specialty businesses, further simplified our overhead structure, and rolled out our 80/20 Lighthouse model to 74 box plants to drive improved operational efficiency and service levels. We launched the Lighthouse implementation in our mill system in the third quarter.

Commercially, we continue to invest in our best-in-class experience for our customers. This has resulted in key strategic wins across national and local customers. As we continue to benefit from strong margin improvement in North America, we have pulled the levers of change aggressively. The tremendous effort and focus by our team is working. We will continue to build on our progress in North America while leveraging our 80/20 playbook in EMEA. Now moving to slide 6, let me cover a few quarterly highlights. To begin with, our packaging solutions businesses grew EBITDA sequentially at 28%. These results underscore the progress we’re making with our 80/20 implementation as we move to demand. We came into the year, we anticipated U.S. box industry shipments would be up 1 to 1.5%.

However, we now expect industry shipments to be down approximately 1 to 1.5% for the full year due to factors like trade uncertainty, soft consumer sentiment, and weak housing market. Similarly, in EMEA, our expectation coming into the year was for box volume to be in the 2 to 3% range. We’re now seeing that closer to 1%. While the markets are challenging, we are controlling our own destiny. We control our customer-centric approach, and that focus is working in North America. In the month of September, marked an important milestone as we took market share and grew box shipments. That trend will continue in the fourth quarter and 2026 despite softer than expected market conditions. We have continued to build momentum on our transformation journey and are rapidly executing cost-up measures that will yield additional benefits in 2026, which I’ll talk about in detail later.

In addition to our mill closures and specialty business exits, we still expect to close the sale of Global Cellulose Fibers by year end pending regulatory approval. During the balance of our time today, we’ll walk through more details about our third quarter performance, our outlook for the fourth quarter, momentum into 2026, and updated targets for 2027. Now moving to slide 7, looking at our overall company performance excluding Global Cellulose Fibers. Our third quarter results reflect solid progress and additional proof points along our transformation journey. Third quarter revenue is slightly higher sequentially, driven by continued strong price realization and stable volumes. Importantly, we delivered our expectation of significant sequential EBITDA improvement in the quarter. As a result, our EBITDA improved by 28% and our margin expanded by approximately 300 basis points.

Our adjusted EBIT and EPS results included the accelerated depreciation expense of $675 million related to our facility closures, which impacted EPS by $0.81. Free cash flow in the quarter increased sequentially to $150 million, primarily driven by strong growth in operating cash flow. Despite approximately $60 million of direct cash costs related to our transformation, the strength of our balance sheet allows us to invest and position ourselves to drive sustainable, profitable growth. I’m now on slide 8. Sequentially, we saw a significant improvement in EBITDA this quarter of approximately $190 million for International Paper Company’s continuing operations with the Global Cellulose Fibers business included. We achieved more than $1 billion of EBITDA in the quarter, in line with our expectations. I’d like to take a moment now to acknowledge the entire Global Cellulose Fibers team for their contributions and their hard work demonstrated throughout this transition.

We wish them continued success as they team up with American Industrial Partners. Now I’ll turn it over to Lance for a few additional details. Thanks, Andy.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Still on slide 8, let me touch on a few housekeeping items related to GCF. First, we’ve recast this year and the prior two years of financials to reflect Global Cellulose Fibers moving to discontinued operations. Second, we’ve identified approximately $60 million in annual stranded overhead costs, which we have reallocated to the corporate line throughout 2025. A significant portion of these costs will be covered by a transition service agreement following the close. As the TSA winds down, any residual stranded costs will be eliminated. Third, with the signed transaction, we’ve written down the Global Cellulose Fibers business to fair market value, and the associated impairment of approximately $1 billion is reflected in the discontinued operations line this quarter.

Finally, upon closing, we intend to use the sale of these proceeds of Global Cellulose Fibers to reinvest in our Packaging Solutions businesses and pay down debt in order to sustain our target credit metrics and maintain a strong investment-grade rating. Turning to slide 9 in our Packaging Solutions North America third quarter results, as a reminder, we are using adjusted EBITDA for our bridges as a better comparative metric during the company’s transformation. Looking at the data sequentially, price and mix in the third quarter was higher by $28 million, primarily due to strong price realization from prior price index movement. Volumes were relatively stable in the third quarter, and operations and costs were $49 million favorable, primarily driven by the non-repeat of second quarter items, as we discussed on the last call, and the impact of strategic cost out initiatives.

Planned maintenance outages resulted in $86 million of lower costs in the third quarter. In order to accelerate our mill footprint actions, we adjusted our outage schedule accordingly. Going forward, we will continue to optimize planned outages to align with demand and balance our network. Input costs were $27 million unfavorable for the quarter due to higher energy costs, including the incremental costs from the natural gas curtailment that continues at our Valliant mill. All of this leads to an adjusted EBITDA for North America of $655 million following the bridges. I’d like to note our depreciation expense in the third quarter was $831 million, which includes the accelerated depreciation expense of $619 million associated with the closure of our Savannah, Riceboro, and Red River mills. Turning to slide 10, let me take a moment to put the trajectory of North America business into perspective.

As mentioned on our last call, we finished the second quarter with a gap to industry around -4% but expected to close our gap by the end of this year. Although industry numbers will not be published until tomorrow, we believe that we will be in line or above industry growth rates in the third quarter. Importantly, we exited the third quarter with volumes up 1% year over year in September, and we are seeing that trend reinforced in October. This gives us confidence in market share gains in the fourth quarter. As you can see in 2024, our volume trajectory versus the industry was a direct result of strategic actions we took to renegotiate low margin contracts. While this had a significant impact on our volumes, it allowed us to shed less desirable business and refocus our capacity and commercial efforts on higher value, more profitable businesses.

You can see the benefits of these changes starting to take effect in 2025, where we have closed the gap to market and expect to have above market performance in the fourth quarter and 2026. The current trajectory is consistent with our expectations and further affirms our strategy is working. Turning to slide 11, let me provide some detail on our fourth quarter packaging solutions North America outlook. Taking a look at volume, we expect industry demand to remain relatively stable in the fourth quarter. However, our outlook of an $82 million decline includes approximately $60 million of unfavorable commercial impact associated with the exiting of the two strategic, non-strategic, excuse me, export and specialty markets businesses. In addition, there are three less shipping days sequentially, which we anticipate will be partially offset by the benefit of strategic customer wins and stronger seasonal volumes.

We expect operations and costs to be favorable by $44 million in the fourth quarter, primarily due to the $60 million of cost out benefit from mill closures tied to the exit of the non-strategic export and specialty markets. This benefit is partially offset by seasonally higher labor costs and reliability spend aligned with our planned outages. Just to be clear, the $60 million benefit in option costs related to the mill closures in the quarter offsets the $60 million of negative commercial impact in volume. The fourth quarter will also include higher maintenance outages sequentially as planned. All in, our fourth quarter outlook for North America is approximately $600 million of EBITDA. Now moving to Slide 12, as we look to the balance of 2025 for North America, we expect continued EBITDA improvement, building on our strong first half momentum.

Let me provide you with more details of our commercial and cost out improvement. This bridge reflects the expected benefits that we are realizing in the second half of 2025. From a commercial perspective, the benefit from the February price increase will continue to ramp throughout the year as we roll out our Lighthouse model. More broadly, we expect more wins with strategic customers both nationally and locally. On the cost front, the EBITDA improvement throughout 2025 is primarily driven by corporate overhead, structural changes, and the closure of the Red River mill. These actions taken earlier in the year continue to flow through in the second half and into 2026. This quarter, we also announced the closure of Savannah and Riceboro mills.

As I mentioned on the last slide, the reduction in fixed costs favorable to EBITDA is offset entirely by the commercial margin loss from exiting saturated kraft and low margin export markets. Both of these mills had significant near term capital requirements and did not return their cost of capital through the cycle. By taking these strategic actions, this capital will be redeployed for stronger returns within the business.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Let me add some context here. In light of the more challenged demand environment, we are accelerating our cost out actions. While these are difficult decisions, they are the right thing for the long term success of the business. This has been an active quarter and I want to speak to several decisions in North America. Lance just walked you through the mill closures announced in August, which ceased operation last month. Earlier this month, we also agreed to sell our bags business, and just last week we executed the decision to outsource a large portion of our North American IT service and support functions. A strategic move toward better scalability, cost efficiency, and positioning IT and our businesses to deliver operational and customer excellence. We’re grateful to all employees affected by these actions. Thank you for all of your contributions and we wish you very well in the future.

Now let me hand it back to Lance to walk you through EMEA’s third quarter results.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Thanks, Amy. Now turning to Slide 13 in our packaging solutions EMEA third quarter results, while we continue to see soft demand in EMEA, our business grew EBITDA and expanded margin sequentially. While price and mix contributed $13 million of improvement in the third quarter, this was below our expectations primarily due to recent downward price index movement. Volume was also lower than expected in the third quarter, which we believe resulted from overall market softness and destocking in anticipation of paper price declines. Operations and costs were unfavorable by $10 million, primarily due to the pricing impact on the value of our inventory. As a result of the paper price decline, we experienced lower fiber costs of $19 million in the third quarter, all of which resulted in third quarter adjusted EBITDA for EMEA of $209 million.

Turning to Slide 14, I’d like to discuss our fourth quarter outlook for packaging solutions. EMEA price and mix are expected to improve by $12 million next quarter, primarily driven by continued box price realization due to the flow through and timing of prior price index movement. Turning to volume, we expect an increase of $12 million in the fourth quarter based on improved seasonality heading into the holidays and the start of the citrus fruit season in Morocco. In addition, we expect operations and costs to be $24 million unfavorable, primarily due to increased costs related to the seasonally higher volume. Finally, we expect favorable fiber costs to provide a $16 million benefit in the fourth quarter. All in, our fourth quarter EBITDA outlook for EMEA is approximately $230 million.

As I turn to Slide 15 and as we discussed in North America, we are showing a bridge for EMEA. Similarly, that reflects the 80/20 progress and the anticipated EBITDA benefits we expect to realize in the second half of this year for our commercial initiatives. Building towards our 2025 EBITDA targets, we previously identified uplift from prior price index moves. Since then, the European market has been challenged by demand softness and there have been several price index decreases offsetting that original gain. Our current view includes known adjustments to the paper price index. As a result of the challenged macro environment in EMEA, we are taking action to accelerate our cost out initiatives. This quarter, we’ve proposed several closures across East Europe, the Nordics, and Italy, which are all subject to consultation.

Last quarter we announced a proposal to delayer and remove the regional overhead structure in Europe as well as consolidate from 13 to 7 sub regions. Consultation on this reorganization is progressing with an anticipated financial benefit occurring in 2026. Finally, we are launching our Lighthouse pilots in Spain and the UK, similar to the model we rolled out in the U.S., with plans to expand across EMEA next year. I would also note that the input cost and other bar includes the additional month of DS Smith and favorable energy costs offset by inflation. Obviously, EMEA is not in the position we expected this year. While we have significantly improved our strategic positioning and competitive strength, market softness and negative price movements have made the start to the DS Smith acquisition challenging.

That said, we have an aggressive roadmap to improve profitability, invest in our strategic pillars, and position the business for long term success. Now let me turn it back over to Angie.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Thanks, Lance. I’m on slide 16 as we look ahead to 2026. We’ll provide full year guidance on our next call at the end of January. The numbers on this slide show clear line of sight to the additional benefit of actions we have announced in 2025, which equate to $600 million of incremental adjusted EBITDA in 2026. The majority of the benefits already executed come from cost actions. We will see the impact from our footprint optimization, distribution, overhead, and sourcing initiatives as we realize the full benefit of our 2025 actions with approximately $500 million of cost carryover into 2026. We will also see incremental margin gains from known strategic commercial wins in North America and EMEA, partially offset by exiting the non-strategic businesses related to Savannah and Riceboro closures.

We have not included in this analysis additional upside potential for market growth, price, and future cost actions including productivity as we drive improvements in our North American mill system. Collectively, the actions we have already executed and actions we will take going forward are foundational to our controlling and shaping our future performance in a dynamic market environment. I’m on slide 17 as we finalize 2025. I want to share with you our updated transformation targets. There are a few key points. First, our execution is on track. We have taken decisive action in North America, and we are accelerating our execution in EMEA. Second, market headwinds throughout 2025 will likely persist into 2026. The soft market has cost more than $500 million in profit this year alone. Importantly, the profit opportunity remains. It is simply going to take a year longer to achieve.

We expect to capture the full opportunity by 2028. Third, due to the impact of the market softness, we are adjusting our targets for 2025 and 2027 compared to what we outlined at our Investor Day in March. Again, we’ll offer full guidance for 2026 in January. With the market softness continuing in North America and EMEA, our revised full year 2025 targets are $24 billion of net sales, adjusted EBITDA of $3 billion, and free cash flow of negative $100 million to $300 million. Our long term ambitions remain. International Paper Company has the ability to deliver on the targets we laid out at Investor Day. In the medium term, however, the softer market this year and into 2026 has delayed our progress. We can deliver $5 billion of EBITDA in 2027 and continue to accelerate our progress thereafter.

With our improving performance, cash on hand, and strong balance sheet, we will continue to invest aggressively in our transformation. I’m excited for the future as we retool International Paper Company through 80/20 and our strategic pillars. The team is doing yeoman’s work across the company. We are committed to delivering on our transformation plan. Before we move to Q&A, I want to thank our IP team. Our people are working tirelessly to win together. We are on an important journey to realize our potential as the market leader, employer of choice, and value creator for customers and shareholders. Now, operator, let’s open it up to questions.

Krista, Call Operator: Thank you. If you would like to ask a question, simply press star 1 on your telephone keypad. To withdraw your question, press star 1 again. As a reminder to ask a question, press star 1. To withdraw your question, press star 1 again. We will now pause a moment to compile the Q&A roster. We do ask that you limit yourself to one question and one follow-up question. Our first question comes from the line of Mark Weintraub with Seaport Research Partners. Please go ahead.

Mark Weintraub, Analyst, Seaport Research Partners: Thank you. Congrats. Progress in a tough environment.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Thank you, Mark.

Mark Weintraub, Analyst, Seaport Research Partners: First question for me. I heard Lance’s explanation in terms of kind of the opportunities in EMEA, but one thing I’m just trying to really understand is the difference between what you’re going to be doing in EMEA versus North America and sort of two pointed or two points on that one. There was a lot of opportunity in North America to take out excess capacity that had developed in the system and you basically didn’t have to walk away from any business. There wasn’t the negative commercial impact that is related with Savannah. For a lot of the stuff done earlier, are there those types of opportunities in EMEA or is it more the second type where you know it’s going to be improvement over time, tough decisions being made. Second, in North America there also had been commercial decisions made a few years prior that had hurt.

Essentially you’re able to make changes. We’ve seen lots of benefit from that. Are there things like that in EMEA too or is that how’s the commercial opportunity in EMEA different from North America?

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Those are both great questions, Mark, thank you. On the cost front, it is a little bit different, right? We don’t have the same kind of magnitude of excess mill capacity or paper capacity that we had in North America. That said, there’s more capacity out in the field. If you think about the box system and underutilization in the box system, we did not have a ton of underutilized capacity in the box system per se. We certainly found it as we have implemented the Lighthouse model. Those two things were true in North America. In Europe, we definitely have excess box capacity as we look at the European footprint. On the mill side, what we have is a pretty considerable amount of our capacity that isn’t going into the box business. We have to really look at the economics around that and make really good choices.

One of the things that’s different in Europe than in North America is that complexity. Where we found a lot of complexity in North America was at the corporate center, as you kind of defined it, so call it the Memphis Corporate Center. That really then bled into the field, that added complexity from a product, from a customer standpoint, policies, procedures, investment flow, investment, those sorts of things that all still exist very similarly in Europe. Mark, the difference is it sits kind of in the above country structure. There’s a very complex above country structure that we talked about last quarter, Lance talked about again this quarter that we’ve already announced and we’re in consultation to address. What I would say is on a proportional basis that the cost opportunity is as large or larger.

Frankly, when you just look at the cost structure, the differences are a little bit in the buckets that we find. Lance, is there something you want to add?

George Staphos, Analyst, Bank of America: You good?

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Okay, excellent. Mark, does that answer that question for you?

Mark Weintraub, Analyst, Seaport Research Partners: Yeah, no, that’s super helpful. Just one other follow-up in parks. I’m getting this asked from some investors wanting me to ask it. I’m going to ask it on their behalf. Is in the bridging to 2027, I guess we’re kind of starting if we need like another $1.4 billion, if we have like the $3.6 billion.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Run rate already identified.

Mark Weintraub, Analyst, Seaport Research Partners: How much of that would be cost? Takeout, commercial, and does commercial have to include some price now that prices have gone down in Europe, or how to think about that part of the equation?

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Yeah, absolutely, Mark. First, I realized I didn’t answer your second question, so let me get to that. On the commercial decisions, there are not those same magnitude of commercial decisions that have to be made in Europe.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: The issue that we had in North America is that we had priced a number of contracts dramatically underneath the market. As you saw the different pieces, we reversed that both in terms of capturing the margin and now winning market share, which I think is very important. In Europe, we have some commercial challenges, but it’s more of actually focusing the resource. We have an awesome set of resource in Europe around the commercial side in terms of customer focus, helping our customers through their value chain, and driving innovation. That’s a real skill that we have in Europe. It’s probably too diffused, and we’ve got to focus it more on those large key customers that we call our ads customers.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: So that.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Mark, I’m sorry, remind me of the question you asked before that. Of the $1.4 billion, how much is cost and how much is commercial?

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Yeah.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: On a net basis, it’s about 50/50. On a gross basis, as you imagine, it’s more cost because you got inflation.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: To your point, yes, there is some price baked into that. As we have said all along, we have an expectation that we would get to mid-cycle pricing in North America by 2027. We still believe that to be true. That’s probably, I’m guessing, one price rev away and I would guess if you receive an improvement in the U.S. market, that’s probably likely. We don’t have that built into, as you saw in our bridge of 2026, we specifically didn’t talk about benefits from market growth, from price, or from future actions that we haven’t executed yet. We don’t have any of that baked into that $3.6 billion that I just outlined to get to the $5 billion. Yes, we would expect that and we would expect a modest rebound in Europe. You see that being tested constantly. You’ve seen that be tested two or three times this year.

It’s gone up and retracted a little bit. The bottom 25% of paper producers in Europe are in a very, very tough position right now.

George Staphos, Analyst, Bank of America: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: On a cash basis, they’re in a very tough position. I’m not foolish enough to believe that there’s going to be some kind of mass decision making to take out capacity. You see a lot of resilience in terms of holding on by privately held long-term family companies. I’m not looking for a miracle there. We should be executing as we can. We would expect, however, modest price improvement over that timeframe.

George Staphos, Analyst, Bank of America: Super.

Mark Weintraub, Analyst, Seaport Research Partners: Really appreciate the thorough and clear response.

George Staphos, Analyst, Bank of America: Thank you.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Thanks, Mark.

Krista, Call Operator: Our next question is going to come from the line of Matthew McKellar with RBC Capital Markets. Please go ahead.

Matthew McKellar, Analyst, RBC Capital Markets: Hi, thanks very much for taking my questions. Follow up on really the other side of that. North American box shipments comp positive in September, seemingly again in October is quite positive. You made the comment that you expect above market performance in Q4 and 2026. Could you maybe refresh us what kind of volume growth and volume performance versus market you’ve assumed in getting to the 2027 target?

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Yes. All along we’ve assumed a pretty soft market. Right. Our assumptions going into this year were plus 1 to 1.5% in the U.S. We had more robust assumptions coming in Europe, which were disappointing so far. As we look forward, our expectation would be 1 to 1.5% in North America and 1 to 2% in Europe over time. As you know, Europe has a stronger secular trend around moving from other materials, plastics as an example, to fiber, and a stronger consumer component related to that. That’s why you’ve seen kind of stronger growth over time in the European market. We would expect those trends to continue. Very importantly, when we sat and talked about adjusting our 2027 target, we all recognize that we’ve gotten some questions already on, hey, why did you do that? It just was obvious.

It was obvious that the $500 million that we’ve lost this year from the combination of volume and price, unless you expect a major pickup in volume to the tune of the U.S., you have to claw back a couple points additionally, and the same in Europe. Unless you expect that over a two-year period, those benefits are going to get pushed out. We thought it was appropriate to capture that and not kid ourselves or anybody else around that and focus on what we can control. Our expectation, Matt, is that we’re talking the 1 to 1.5% in North America and the 1 to 2% in Europe.

Matthew McKellar, Analyst, RBC Capital Markets: Very clear. Thanks very much. Just as a second question, last for me, could you maybe just provide a bit of a perspective on the strategic rationale and high-level economics for the Red River conversion and what kind of returns you might be targeting with that investment? Thanks very much.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Yeah, you bet, Matt. On relative to Riverdale, importantly, we mentioned it in the script, but the decision on Savannah, as you looked at that, right, we had all the economics that screamed about Savannah and why we didn’t want to put an incremental $300 million into that. The opportunity at Riverdale was really around moving to lightweighting, as you know. That’s about a $250 million investment, plus or minus, and we would expect near 20% returns on that. It’s a really attractive spin from a business that for the long, for a very, very long time and indefinitely was going to be under its cost of capital to a business that has an attractive future and attractive return on capital.

Matthew McKellar, Analyst, RBC Capital Markets: Thanks very much. I’ll turn it back.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Thank you.

Krista, Call Operator: Our next question is going to come from the line of George L. Staphos with Bank of America. Please go ahead.

George Staphos, Analyst, Bank of America: Hi. Thanks for taking my call. Thanks for all the details and congratulations on the progress. Andy, I guess first question I had for you. If we look at the change in the guidance for this year and we appreciate the update, the free cash flow number for us from our vantage point moved a decent amount. I think it was a $1 to.

Philip Ng, Analyst, Jefferies LLC: $300 million.

George Staphos, Analyst, Bank of America: Positive for the year and it’s now a comparable deficit. What were the primary areas in terms of the movement there? Was it just purely the cost actions that you took at Savannah, et cetera, that moved that, or were there other factors there? I just want a clarification on the answer you were giving to Mark earlier. As we think about the commercial and the cost out targets that you initially had in your March guidance and now in the current guidance, have those figures actually changed or are they still the same? I had one follow on.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Let me do the second first. No, those have not changed. That’s consistent. On the second question, on the first question, cash flow, it really is vastly the slowdown in the market.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: That $500 million, if you look at the $500 million of profit, actually it’s a little more than $500 million of profit that we would have expected to have captured if the market had been at the expectations we talked about at our investor day. We would be right on, if not a little bit better, on the cash flow from a cash flow perspective. It really is attached to the market. There are some incremental costs that are higher than we expected because we’ve been more aggressive in terms of timing of some of the actions. It’s not a giant number, it’s not a huge number. On a relative basis, it’s probably $50 to $100 million more than we had expected to spend. Importantly,

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: We have a decision to make and I’ve made that decision, which is not to back away from the transformation plan. We have the balance sheet, we have the proceeds from GCF, we’ve sold a number of smaller businesses, we have the operating improvements that we have. I think it would be a fundamental mistake to slow down our transformation by pulling back on CapEx. I really do believe that. As long as we’re in the area that we’re in, we need to move at full speed. You’re seeing exactly what happens when we get this right in North America. It’s not linear, it’s not perfect. It’s not going to be perfect and it’s not going to be linear.

The level of improvement that we can drive in this business when we get the asset balance correct and we are investing in the commercial front end of this business, you can see what happens if you just kind of put North America in perspective. You go back a year ago. We were losing market share, we were getting crushed on volume and we were seeing declining incremental margins.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Therefore, we were cutting capital. We were in a spiral that you cannot be in, in a business. We have reversed that spiral in 18 months. I mean, I am incredibly proud of that. Team EBITDA is up 40% year over year through the third quarter, 40% year over year. We’ve gone from losing market share to winning market share, and we will finish this year above our cost of capital in North America. That’s a pretty awesome turnaround. Europe will be harder. I’m not a Pollyanna.

Philip Ng, Analyst, Jefferies LLC: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: There’s more hard work to be doing. It takes longer and it costs more, but the playbook is the same. We’re going to go after it and we’re going to stick to this. That’s critically important. I appreciate that.

George Staphos, Analyst, Bank of America: Andy. I guess my second question, and it’s kind of a two-parter, but they are tied together. You did see, and congratulations to you at least in the results, in terms of a pickup in box shipments in September. You’re looking for the positive in the fourth quarter, as you mentioned. What’s been driving that? Are there any particular end markets where the new International Paper Company approach is particularly gaining traction as we’re seeing it? The related question, bigger picture, if I look at the results you’ve put up and that some of your peers have put up now, the narrative is everyone is, I shouldn’t say everyone, but individually, each of the companies is really trying to produce to market. You’re seeing your margins do fairly well, you know, 17% or better.

There’s a lot of volume being sort of reintroduced back into the market, which means there’s another portion of the market that’s really not earning a very high margin. Is that a comparatively good place for International Paper Company shareholders to be in, or relative to where you were back in March, a more dangerous place for International Paper Company shareholders to be, where there’s a lot of players out there with a lot of volume and not necessarily a lot of margin? Thanks and good luck in the quarter.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Thank you. There was a lot in that question. If I miss it, help me out here a little bit. We know where to find you. Yes, thank you very much. Relative to what’s going on in the marketplace, first of all, we don’t comment on competitors ever. That’s just not a good thing to do, so we won’t do that. Everyone’s got to make their own choices. Relative to our perspective in terms of right sizing ourselves and focusing on the right kind of markets, we think we’re getting the balance correct there. In terms of the things we’re trying to utilize, our strengths in the marketplace, where we are winning over market is really on select initiatives around very specific customers in those markets that we find attractive. As you imagine, we touch pretty much every market by just our sheer size and scale.

We tend to be, I’m going to call it, medium sized to larger customers. That tends to be, but we have lots of great smaller customers all over the world. Our strength in fruits and vegetables and protein has absolutely shown up. We’ve gotten highly engaged on strategic customers. We’re just putting a lot more time, energy, and resource into those customers that we believe are critical to our future. I’m not going to go into the specifics around those, but it really is customer centricity. It’s about putting resource on the most attractive customers that fit our business model. To your second question around what’s happening in the overall marketplace and margin, again, I’m going to speak for us and not speak for anybody else. I think what’s happened in the industry collectively is at times people have chased the incremental cash benefits of getting incremental volume, right?

In our world, if you’ve got excess capacity and you’re sitting on fixed cost and you bring in something, we sit in North America as an example, we sit at a 65% to 70%, what I call material margin. Think of contribution margin not including direct labor. That means that the next dollar in on our average piece of business comes in at $0.70 or the next dollar out leaves at $0.70 of profit either way. Even if a competitor picks it up at 20, at 20% off, and they pick up 50 in the very short term, that sugar high feels good, right? You see that and you’ve seen that play out a lot over the years. I’ve looked at this a lot, kind of how people have played this. What that does is it stops us and others from actually doing the right thing.

That means that eventually that business that you bring in has to be invested in. It’s going to require capacity, it’s going to require investment at some point, and all of a sudden that sugar high goes away and then that kind of gets passed around. What we are doing is we are having the discipline to not do business in that way. What other people do is up to them. We are going to have our own discipline to go after markets that can earn an attractive return on capital. Importantly, in that, the three pillars of our strategy really matter in concert. Number one, to have an advantaged cost position, a huge piece of what we’re doing is driving cost out of this system. We have an advantaged cost. That does not mean that we intend to sell at the lowest price.

What that means is we have optionality for margin expansion and reinvestment that competitors can’t. If we have a lower cost position, second, around customer-to-customer experience, we just talked about that. We’re invested heavily. We’ve added 22% more salespeople this year than we had last year. We changed our pay for performance, we’ve changed our innovation process. All of those things are around really driving that customer experience. That’s backed up by major improvements in quality and on-time delivery that our customers are noticing. Finally, we want to have a relative strength in the markets that matter to us, and we’re going to invest in that. If we do that, we will have discipline. If other competitors decide that they need to get their house in order, that’s for them to decide.

George Staphos, Analyst, Bank of America: Okay, Andy, I appreciate it. We’ll turn it over. Good luck in the current quarter.

Matthew McKellar, Analyst, RBC Capital Markets: Thanks.

Krista, Call Operator: Our next question is going to come from the line of Michael Roxland with Truist Securities. Please go ahead.

Matthew McKellar, Analyst, RBC Capital Markets: Yeah.

Michael Roxland, Analyst, Truist Securities: Thank you, Andy, Lance, Mandi and Michele for taking my questions. Congrats on all the progress in a difficult environment.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Thanks.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Mike, I want to follow up with you.

Michael Roxland, Analyst, Truist Securities: You on the closures of Riceboro and Savannah. Can you help us understand the EBITDA benefit associated with those closures? When I look at previous closures like Orange and Red River, you guys called out specifically the adjusted EBIT or adjusted EBITDA benefits associated with those mills. I don’t believe anything was highlighted in your recent SEC filing for those mills. That’s question one. Question two, are you now at a point in your U.S. mill system where you can’t reallocate tons and need to actually make mill investments, such as what you’re doing at Riverdale? What I’m trying to get at is if you can’t reallocate the tons from Savannah elsewhere in your system, then there might be a negative EBITDA impact in 4Q and maybe early 2026. Any color you can provide would be helpful.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Yeah, you bet. Let me do this, and then, Lance, if you want to add some color to it, please do. Let me talk. I’m going to split Savannah and Riceboro because they’re different. Savannah was primarily, principally shipping into the export market and what I would call the low value piece of it, which was effectively an outlet on volume. When I look at that and you look at it over a cycle, we did a ton of work on this. What you see is that at some point in the cycle, you are making positive cash. You’re actually creating cash, but through the cycle, you are not.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: It is not generating above its cost of capital. You are destroying value. It required an ever-increasing capital investment to go into the system. In shutting Savannah down and in exiting what I’ll call that low value export market, it’s effectively a push, right? On an EBITDA basis, it’s effectively a push. Very importantly, you’re talking about something that on a replacement asset value is north of $1 billion.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Maybe quite a bit north of $1 billion. If you had to build that mill from scratch, you would never build that mill from scratch to service that market. You’d never do that. On an ROIC basis, it’s a huge win. However, you do have that sugar high comment that I just mentioned a moment ago. That’s part of the thing that you get trapped in.

Philip Ng, Analyst, Jefferies LLC: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: You get trapped in that when the export market’s hot, like a little bit. I remember last year we had a few months where it was really good, it feels great. When it comes off, you really hate it. You get caught in that trap and you just say, no, we have to look at this from a long-term return on investment. What’s the right thing to do for capital employed? That trade that I talked about with Red River is a really, really important trade. Those are the kinds of decisions that we’re making throughout the company.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: That’s really important here. I know how many moving parts are in this, and then transformations, again, they’re not clean, but that’s the kind of stuff that we’re doing to drive this business. Riceboro is different. Riceboro was a mill that simply was never going to have the cost position to compete, so it made sense to move that volume to other mills. That’s modestly positive, but to be clear, that’s a very small mill.

Mark Weintraub, Analyst, Seaport Research Partners: Gotcha.

Michael Roxland, Analyst, Truist Securities: You know, Andy, you are now, it’s very helpful. Are you at a point in your U.S. mill system though where you can’t reallocate tons and you need to make, you actually need to make mill investments such as what you’re doing in Red River?

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Yeah, I mean in terms of are we going to take more capacity out? Not in the near future, that’s for sure. If you look at the drive now, you’ve got a few things that are real. We’re very focused on in the mill system. Number one is, as I talked about last quarter and I referenced modestly in this quarter, we have a lot of costs that are in the system from the lack of investment over 10 years. We started this last year and we’re going to keep going. That’s why I made the comment on sticking to the strategy. If we invest aggressively in that mill system, we can capture a huge chunk of that kind of $400 million that I think is in that, it’s waste in the system that when the mills are running well, you can get a huge chunk of that $400 million.

You’re not going to get all of it. There’s always going to be things like the valley and gas situation. It stinks and you hate to have it. It’s taken way longer to address than we thought it would. Those things are going to happen in these big complex systems. What you shouldn’t have are things that are breakdowns and issues from maintenance that’s being deferred. I think our investments, we can go and capture a whole bunch of those, as you know. Those take time. You have to invest and they take time. Over the next couple of years we should be able to get the vast majority of that to our bottom line. The second part that I think is very important is the reinvestment in ongoing productivity.

If you look at the last 10 years in our business and you are looking for any kind of what I call net productivity, it hasn’t been there. As a matter of fact, it’s gone the other way. We all know the math around that. If you can get, if the market is growing in that 1% to 1.5% range and you can get modest market share gains over time, that’s good. If you can get that plus productivity over time, you knock the socks off. What we need to do is get that productivity engine moving. We know how to do that. It’s just a matter of it is going to take some time. It’s those two pieces together.

Michael Roxland, Analyst, Truist Securities: Thank you. Just one quick one. You mentioned accelerating cost actions in North America. You sold the bags business, you mentioned just now outsourcing a large portion of your IT support. Can you comment on the EBITDA savings you expect to achieve from those moves? Are there similar types of actions you could potentially take in North America if the market remains challenging, as you sort of indicated it would in 2026? Thanks again.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Yeah, we’ve captured those in our numbers that we laid out. If you look at the bridge, most of that stuff that we’ve talked about will be realized. Most of it will be realized in 2026. There will be some tail that will roll to 2027. All of the different things, the mill closures, the IT, et cetera, those are in that bridge that I put out. For the most part, it’s probably three quarters or more that are in that bridge. You’ll get a little, you’ll get 20-25% that will roll over into 2027, somewhere in that neighborhood. In terms of future actions, we still have a long way to go. We know that. In terms of the big structural stuff in North America, we’ve gotten after an awful lot of it and now we have to drive those things to resolution.

We’ve got to go after the cost structure in the mill system. There’s still more overhead to address. Obviously, we’re just starting the journey in Europe. Thanks very much. Thank you.

Krista, Call Operator: Our next question is going to come from the line of Anthony James Pettinari with Citigroup Inc. Please go ahead.

Anthony James Pettinari, Analyst, Citigroup Inc.: Good morning.

George Staphos, Analyst, Bank of America: Morning.

Anthony James Pettinari, Analyst, Citigroup Inc.: Hey, just following up on Mike’s question. With Savannah and Riceboro closed and let’s assume Red River comes up, what percentage of International Paper Company containerboard production in North America will go to an International Paper Company box plant? What’s your integration rate going to be? What percentage would be exported offshore? Understanding that can kind of bounce around a little bit, but just on a normalized basis, can you give us any sense there?

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Yeah, it’s about 90% that will be consumed in our box system, plus or minus. We have partners in the box world in North America and we’ll still be, we still have some export that goes out. The export that we have, we like that business. It’s highly strategic, it’s profitable, it earns its cost of capital and above. It’s an attractive piece of business. Obviously our partners, they’ve been long term partners, they’re great partners and they’re going to continue to be. The export piece is like 6%, 7% somewhere in there.

Anthony James Pettinari, Analyst, Citigroup Inc.: Okay, that’s very helpful. I guess just looking at the mill system exiting the year, are operating rates where you want them to be or are they still maybe a little bit loose because the demand is weak? Are you going to be running tight until Riverdale comes online? Just given the kind of volatility in demand and weakness in demand, how should we think about the sort of timing of Riverdale? Is that something that could get flexed sooner, later, or just any thoughts there?

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Yeah, we’re okay in terms of our capacity utilization. If you look at operating rates, we’re okay there. We are going to make sure that from a paper strategy perspective, if we get a bump up in activity, we’re being very mindful this has been a soft market. If the market bounces back and you get a quick pop back, our paper strategy, we want to be smart about that. Absolutely, as we drive productivity into the system. If we’re driving productivity into the system, what that does, then that allows us to capture that 1.5% growth without adding fixed cost. That’s where that magic is. That’s really, really important. I’m not awful worried about that. The plan here on Riverdale is late next year is where that’s really going to start being up and going.

We think that that’s good timing and certainly positioned well relative to a growing segment of the marketplace.

Anthony James Pettinari, Analyst, Citigroup Inc.: Okay, that’s very helpful. I’ll turn it over.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Thanks, Anthony.

Krista, Call Operator: Our final question today comes from the line of Philip Ng with Jefferies LLC. Please go ahead.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Hey guys, Europe is really, how you guys doing?

Philip Ng, Analyst, Jefferies LLC: Europe’s clearly more challenging than expected coming in a year. I think you and your peer have both talked about perhaps 50% to 75% of the non-integrated tons in Europe are operating at uneconomic levels, maybe not even cash flow positive. I believe your Europe business, about 40% to 50% of the paper you make, you’re selling into the open market or you trade tons. Can you kind of let us know if that business, one, is cash flow positive or EBITDA positive at current.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Levels, is that a business you want?

Philip Ng, Analyst, Jefferies LLC: To be in the medium term? Is there a good way to think about your unintegrated integrated business in Europe? Is there a massive spread in terms of margins?

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Yeah, good question. Specific to the non internally consumed product, we’re evaluating that whole thing. We’re going through that right now. Frankly, it’s not even necessarily tied to the economics of it, just tied to the economics of it because it’s really around the strategy, how it fits with our business in terms, I mean, if you look at it right now, Europe in total is from a cash flow basis is using cash. Because of the restructuring that we’re going to entail on. We do have to restructure that. We’re going to do that. I do believe, however, I know, however, that we have pockets of our business, both in the mill system and in our box system, that are losing money on a cash basis. There’s no doubt about that.

As we go through that, that has to be rectified and through commercial and or cost actions to get to an attractive return on capital. In terms of the split, we haven’t talked about that. We haven’t gone into that level and I don’t think it’s good to do that. I don’t think competitively it’s good to share that kind of information. We know where the pockets of profit and loss are. We know we have a roadmap that we’re working on. Obviously, anything and everything we do in Europe has to have the discipline around the consultation process and we need to follow that appropriately. We’ll do that in all of our public comments and all of our private engagements. That’s helpful.

Philip Ng, Analyst, Jefferies LLC: You know, precinct in EMEA.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: A little newer for all of us.

Philip Ng, Analyst, Jefferies LLC: Lance, did you mention on the prepared remarks that you’re going through a work counseling process in Eastern Europe, Nordic, and Italy? Can you give a little more perspective? What’s out there in terms of potential closures? Are those box plants? Is that mills? Just kind of help us size. How quickly could you see that, and perhaps as you kind of accelerate this restructuring in Europe, how quickly are you going to move, and could we see some uplift perhaps in 2026, or just more of a 20-something event where you see the big inflection in terms of cost-out savings?

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Yes. Phil, we have to dance carefully on this topic. The reason I say that is there is a highly defined process in Europe around consultation. What that means is we’re working hand in hand with the works councils and with the regulators to go through that process in a very detailed way. I appreciate the fact that we all want to put a number out there and put a date out there and talk about what’s going to happen. That is different than the U.S., and what I’ll say, and then Lance, you can add any color that you want, is we are going to move aggressively toward.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Right.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Sizing Europe. We have to, right, as does everybody else, given the market conditions. Everyone’s got to make their own choices around that. The marketplace is going to have to decide what they’re going to do. We are going to be aggressive about getting ourselves in the right economic position. That being said, it has to be in conjunction with the regulations and the laws and the practices in Europe. I don’t have anything to add. I think you covered it in terms.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Of being aggressive about the actions that we take under the appropriate circumstances without getting wrapped around the axle. That’s probably as much as we can say.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Yeah, just expect it, Phil. We’re going to move right. The stuff that we have talked about already that’s in consultation, we’re going to go through that process the right way, but we know the magnitude of what we have to address. Okay.

Philip Ng, Analyst, Jefferies LLC: Sorry to sneak one more, then something perhaps you could talk about a little more freely. Good to see progress on box events and you’re calling up 1%. That certainly appears to be outpacing the market. Given the line of sight and perhaps in the wins you already have in North America, on the box side, is there a good way to think about relative outperformance that we could hope to expect in North America for you guys next year and some of the wins you’ve had in terms of what type of customer mix of business?

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Yes.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Based on what we’re looking at right now with known wins and losses, we think that number is kind of 2%. You pick your market number, but we think we can outpace the market by a couple of points in 2026 in North America. Okay, super appreciated color.

Philip Ng, Analyst, Jefferies LLC: Thank you so much.

Lance Loeffler, Senior Vice President and Chief Financial Officer, International Paper Company: Thanks, Bill.

Krista, Call Operator: Thank you. I’ll now turn the call over to Andrew K. Silvernail for closing comments.

Andy Silvernail, Chairman and Chief Executive Officer, International Paper Company: Thank you very much. Thank you, everybody, for being with us on this transformation journey. The work and the focus on 80/20 and on the three pillars of our strategy are critically important, and we’re working it and we’re working it hard. Delighted to see the progress in North America and what that team is doing. Obviously, the North America team is facing headwinds that we didn’t expect, but we’re being aggressive with the realities of that, and we’re getting after it in EMEA. It’s been a tough market, no doubt about it. If we look at both in terms of volume and price, it’s been meaningfully more difficult than we had expected. The same thing holds true. We are moving forward with the same playbook, with the same level of aggressiveness that we have in North America.

We understand the challenge, and we understand the need to get that business in the right place. I want to thank you for your support. I want to thank you for your attention. Very importantly, I want to thank the International Paper Company team for the incredible work that they’re doing in North America and in EMEA. Thank you very much, everybody.

Krista, Call Operator: Once again, we’d like to thank you for participating in International Paper Company’s third quarter 2025 earnings call. You may now disconnect.

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