International Paper Company

Good morning and thank you for standing by. Welcome to today's International Paper Third Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question, please press star 1 on your telephone keypad. To withdraw your question, press the pound key. I would now like to turn the conference over to Guillermo Gutierrez, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Angie. Good morning, and thank you for joining International Paper's third quarter 2021 earnings call. Our speakers this morning are Mark Sutton, Chairman and Chief Executive Officer, and Tim Nichols, Senior Vice President and Chief Financial Officer. There is important information at the beginning of our presentations on slide two, including certain legal disclaimers. For example, during today's call, we will make forward-looking statements that are subject to risks and uncertainties. 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. Our website also contains copies of the third quarter 2021 earnings press release and today's presentation slides. Lastly, relative to the ULM joint venture, slide two provides context around the joint venture's financial information and statistical measures. I will now turn the call over to Mark Sutton.

Thank you, Guillermo, and good morning, everyone. We will begin our discussion on slide three. In the third quarter, international paper grew revenue, earnings, and margins, and we continue to generate strong cash from operations. We continue to see strong demand for corrugated packaging and solid demand for absorbent pulp. We're making strong progress on price realization from our prior increases. Having said that, the supply chain and input cost environment remains very challenging, and it impacted our results much more than we anticipated. The widespread supply chain constraints limited our ability to capture the full opportunity that comes with a strong level of demand that we're seeing. Our mills performed well. However, stretched supply chains impacted volume in our industrial packaging and global cellulose fibrous businesses. Container board inventories in our packaging network improved in the latter part of the third quarter, and we are in a much better position as we enter the seasonally strong fourth quarter. Input costs in the third quarter rose by about $230 million, or 46 cents per share, which was more than two times what we had anticipated, with cost pressure in just about every category. Our Illum joint venture delivered another strong performance with equity earnings of $95 million. On capital allocation, we continue to make significant progress, strengthening our balance sheet, In the third quarter, we reduced debt by $235 million. I would also highlight that our pension plan is fully funded. This is a significant milestone that further strengthens the company. In the third quarter, we also returned $411 million to our shareholders, including $212 million of share repurchases. On October 1st, we completed the spinoff of the printing papers business. IP received a $1.4 billion payment from Silvamo, and we retained a 19.9% interest in the new company, which we intend to monetize within one year. The teams did an outstanding job executing the transaction in a very challenging environment. The printing papers business delivered a strong performance in the third quarter, and we wish Silvamo all the best as they move forward as a standalone company. We are laser-focused on strengthening the company and building a better IP for all of our stakeholders. Tim and I will share more about the progress we're making during today's discussion. Turning now to slide four, we delivered EBITDA of $938 million and free cash flow of $519 million in the third quarter, which brings our free cash flow nearly $1.6 billion year-to-date. Revenue increased by nearly $600 million, or 12%, when compared to last year. And if we exclude the printing papers business, third quarter revenue grew by 14% as compared to last year. We also expanded our margins in the third quarter with realization of our prior price increases. We expect continued margin expansion in the fourth quarter. I will now turn it over to Jim to cover our business performance and our fourth quarter outlook. Kim?