International Paper : 2nd Quarter 2021 Earnings Conference Call (Printable Slides)

Second Quarter 2021 Earnings

July 29, 2021

Forward-Looking Statements

Certain statements in this presentation that are not historical in nature may be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as

"expects", "anticipates", "believes", "estimates" and similar expressions identify forward-looking statements. These statements are not guarantees of future performance and 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) developments related to the COVID-19 pandemic, including the spread of new variants of the virus, the effectiveness and availability of vaccines and associated levels of vaccination, as well as the possibility that strains of the virus may be resistant to currently available vaccines, global economic conditions arising from the pandemic, impacts of governments' responses to the pandemic on our operations, impacts of the pandemic on commercial activity, our customers and business partners and consumer preferences and demand, supply chain disruptions, and disruptions in the credit or financial markets; (ii) the level of indebtedness and changes in interest rates; (iii) industry conditions, including but not limited to changes in the cost or availability of raw materials, energy sources and transportation sources, the availability of labor and competitive labor market conditions, competition we face, cyclicality and changes in consumer preferences, demand and pricing for our products (including any such changes resulting from the COVID-19 pandemic); (iv) domestic and global economic conditions and political changes, changes in currency exchange rates, trade protectionist policies, downgrades in our credit ratings, and/or the credit ratings of banks issuing certain letters of credit, issued by recognized credit rating organizations, (v) the amount of our future pension funding obligations, and pension and health care costs; (vi) unanticipated expenditures or other adverse developments related to the cost of compliance with existing and new environmental, tax, labor and employment, privacy, and other U.S. and non-U.S. governmental laws and regulations (including new legal requirements arising from the COVID-19 pandemic); (vii) any material disruption at any of our manufacturing facilities or other adverse impact on our operations due to severe weather, natural disasters, climate change or similar causes; (viii) risks inherent in conducting business through joint ventures; (ix) our ability to achieve the benefits expected from, and other risks associated with, acquisitions, joint ventures, divestitures and other corporate transactions, (x) information technology risks; (xi) loss contingencies and pending, threatened or future litigation, including with respect to environmental related matters; (xii) the receipt of regulatory approvals relating to the spin-off transaction without unexpected delays or conditions; (xiii) our ability to successfully separate the SpinCo business (known as Sylvamo Corporate) and realize the anticipated benefits of the spin-off transaction; (xiv) the ability to satisfy any necessary conditions to consummate the spin-off transaction within the estimated timeframes or at all; and (xv) the final terms and conditions of any spin-off transaction, including the amount of any dividend by Sylvamo to us and the terms of any ongoing commercial agreements and arrangements between us and Sylvamo following any such transaction, the costs of any such transaction, the nature and amount of indebtedness incurred by Sylvamo, the qualification of the spin-off transaction as a tax-free transaction for U.S. federal income tax purposes (including whether an IRS ruling will be obtained), diversion of management's attention and the impact on relationships with customers, suppliers, employees and other business counterparties, and the impact of any such transaction on the businesses of the Company and Sylvamo and the relationship between the two companies following any such transaction. 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 U.S. Securities and Exchange Commission filings. In addition, other risks and uncertainties not presently known to the Company or that we currently believe to be immaterial could affect the accuracy of any forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Statements Relating to Non-U.S. GAAP Measures

While the Company reports its financial results in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"), during the course of this presentation, certain non-U.S. GAAP financial measures are presented. Management believes certain non-U.S. GAAP financial measures, when used in conjunction with information presented in accordance with U.S. GAAP, can facilitate a better understanding of the impact of various factors and trends on the Company's financial condition and results of operations. Management also uses these non-U.S. GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. The non-GAAP financial measures in this presentation have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in accordance with GAAP. In addition, because not all companies use identical calculations, our presentation of non-GAAP financial measures in this presentation may not be comparable to similarly titled measures disclosed by other companies, including companies in our industry. A reconciliation of all presented non-U.S. GAAP measures (and their components) to U.S. GAAP financial measures is available on IP's website at http://www.internationalpaper.com/performance/presentations-events/webcasts-presentations.

Ilim JV Information

All financial information and statistical measures regarding our 50/50 Ilim joint venture in Russia ("Ilim"), other than historical International Paper Equity Earnings and dividends received by International Paper, have been prepared by the management of Ilim. Any projected financial information and statistical measures reflect the current views of Ilim management and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such projections. See "Forward-Looking Statements" above.

Earnings Presentation I Second Quarter 2021	2

Second Quarter 2021 Results

• Solid earnings growth and strong cash generation
• • $793MM Adjusted EBITDA2
  • $633MM Free Cash Flow3 generation
• Strong revenue growth
• Solid mill and converting performance
• Highest maintenance outage quarter in past decade
• Impacted by extremely low containerboard inventory and significant input and transportation cost pressure
• Outstanding Ilim performance; equity earnings of $101MM
• Capital allocation:
• • Debt repayment of $796MM
  • Share repurchases of $57MM
  • Monetized remaining stake in GPK

Adjusted Operating EPS1

$1.06 2Q21

$0.76 1Q21

$0.77 2Q20

Earnings Presentation I Second Quarter 2021	See footnotes beginning on slide 15	3

Second Quarter 2021 Financials

	2Q20	1Q21	2Q21
Sales ($B)	$4.9	$5.4	$5.6
Adjusted EBIT1 ($MM)	$431	$421	$487

Adjusted EBITDA1 ($MM)

$793

Adjusted Operating EPS2	$0.77	$0.76	$1.06
Adjusted EBITDA1 ($MM)	$743	$730	$793
Adjusted EBITDA Margin1	15.3%	13.6%	14.1%
Equity Earnings ($MM)	$72	$49	$104
3

$730

2Q21

1Q21

Free Cash Flow ($MM)

$638

$423

$633

$743

2Q20

Earnings Presentation I Second Quarter 2021	See footnotes beginning on slide 15	4

2Q21 vs. 1Q21 Adjusted Operating EPS1

								1.4
	.47	.01	(.06)	(.18)
								1.2
					(.14)		.13	1.06
					.07
							1
.76								0.8
								0.6
								0.4
								0.2
								0
1Q'21	Price/Mix	Volume	Operations	Maintenance	Input Costs	Corporate	Equity Earnings	2Q'21
			& Costs	Outages		& Other Items

Earnings Presentation I Second Quarter 2021	See footnotes beginning on slide 15	5