International Paper Company

is now my pleasure to turn the call over to Mandy Gilliland, Senior Director of Investor Relations. Ma'am, the floor is yours.

Thank you, Krista. Good morning and good afternoon, and thank you for joining International Papers' 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-US GAAP financial information. A reconciliation of those figures to US 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, in today's presentation slides. I will now turn the call over to Andy Silverdale.

Thanks, Mandy. 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 in 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 GCF 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 in our 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 middle 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 $300 million capital call, which allowed us to fund our Riverdale conversion to lightweight container board. 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 today 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 five. As we consider our journey and how much is left to accomplish, I want to anchor us in the progress we've made to date, 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 the adjusted EBITDA margin to 370 basis points by 370 basis points. Our strong performance year-to-date has been the result of several costs 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 at EMEA. I'm now moving to slide six. Let me cover a few quarterly highlights. To begin, our packaging solutions businesses grew EBITDA sequentially at 28%. These results underscore the progress we're making with our 80-20 implementation. As we moved 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 in 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 GCF by year-end, pending regulatory approval. During the balance of our time today, we'll walk through our 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 seven. Looking at our overall company performance, excluding GCF, 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 81 cents. 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 eight. Sequentially, we saw a significant improvement in EBITDA this quarter of approximately $190 million for IP's continuing operations. With the GCF business included, we achieved more than a billion dollars of EBITDA in the quarter, in line with our expectations. I'd like to take a moment now to acknowledge the entire GCF 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.