International Paper Company

Good morning and thank you for standing by. Welcome to International Paper's fourth quarter 2026 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 one question. To ask a question, press star 1 on your telephone keypad. To withdraw your question, press star 1 again. As a reminder, Due to time restraints, we ask that you limit it to one question and one question only. Press 1. To withdraw your question, press 1 again. It is now my pleasure to turn the call over to Mandy Gilliland, Senior Director of Investor Relations. Ma'am, the floor is yours.

Good morning and good afternoon, and thank you for joining International Paper's fourth quarter 2025 earnings call. Our speakers this morning are Andy Silvernail, Chairman and Chief Executive Officer, Lance Leffler, Senior Vice President and Chief Financial Officer, and Tim Nichols, Executive Vice President and President of DS Smith. 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. Our website also contains copies of the fourth quarter earnings press release and today's presentation slides. Beginning on slide three, before we jump into the presentation, I want to provide clarity on what will be discussed on the call today. We will begin by walking through the separation announcement for the EMEA packaging business. Then we will discuss our 2025 full year and fourth quarter results, followed by our outlook for Packaging Solutions North America and Packaging Solutions EMEA. We will close out the call with Q&A. So now, let me turn the call over to Andy Silvernail, who will start on slide four.

Thanks, Mandy. Good morning and good afternoon, everybody. And thank you for joining us to discuss the next steps in our transformation journey. Today, I'm excited to announce our plan to create two publicly traded, scaled regional packaging solution leaders in North America and EMEA. I recognize that this action, understandably, is a surprise to most of you. But during this call, I'll walk you through why this is the right step to accelerate value creation for both businesses. My objective today is to answer a few critical questions. What, why, and why now? We look forward to helping you understand how this swift, decisive action is a continuation of our 80-20 focus strategy, an accelerant toward our ambitions, and supports our ultimate objective, which, as always, is to maximize long-term value for our shareholders. But first, turning to slide five, I want to anchor you in our core strategy and how we operationalize it through our 80-20 performance system. While our portfolio is changing, the core strategic principles and the operating model are not. 80-20 is the driver for our transformation, the lens we use to determine where to play and how to win, and it guides us on how we operate each day. The four elements of 80-20 are simplify, segment, resource, and grow, and they ensure that resources are focused on the highest value areas across geographies, customers, and products. The 80-20 methodology is also how we drive sustainable value creation through our virtuous cycle as we build an advantage cost position and a high relative supply position, all delivered for world-class customer experience. I'm now on slide six. The acquisition of D.S. Smith strengthened our regional footprint and positions both businesses in North America and EMEA to advance our virtuous cycle. Through the application of 8020, we have made significant progress on building cost position, executing $710 million of cost out actions through 2025 on a full run rate basis, which includes synergy benefits that will be realized in 2026 and 2027. This was achieved through actions such as optimizing our footprint in North America, streamlining and reducing structural organizational layers in EMEA, and exiting lower margin segments. The combination also advanced our competitive positioning. Our voice of the customer surveys show that we have achieved the highest customer satisfaction among direct competitors in North America and leading scores on customer experience relative to the other top players in EMEA. The improved positioning and bolstered operational capabilities will provide ongoing benefits for each independent region going forward. Moving to slide seven. So why separate and why now? The combination of IP and DS Smith enabled important steps forward in terms of cost and relative supply positions and enabled superior customer experience as demonstrated by a high and increasing in-region net promoter scores. Since the combination, Our teams have made tremendous progress, rapidly integrating the businesses within each region and implementing our E20 roadmap. I'm proud of how our teams have embraced the challenge, and because of these efforts, it has become clear that each business is at a positive inflection point. By acting now, we can more fully enable the full potential of each business. Taking this action will allow both businesses to accelerate progress toward maximizing long-term profitable growth through greater speed, agility, and differentiation, as well as enhanced focus on their different regions and targeted investment approaches. Creating independent companies will further enable the businesses to win in distinctive competitive markets through focused leadership, tailored commercial strategies, independent balance sheets, and flexible capital allocation aligned to attractive but different in-region opportunities. The separation will also give each business the ability to customize their messaging for regional customers without diluting the message for a global audience, which is a very small portion of the customer opportunity. I'm now on slide eight. Overall, we are playing in the two most attractive global profit pools with significant and increasing demand. After the combination of IP and DS Smith, the regional integration of the legacy positions of both businesses Each of the regional businesses is better equipped to compete and win in their respective geographies. However, there are key structural differences in the competitive and commercial landscapes that will require tailored commercial and capital allocation strategies going forward. North America is more integrated and resilient in terms of supply positions and buyers, has a high degree of supply integration, and steady demand growth. EMEA has more localized dynamics at the country level and relatively higher demand growth. Customers in EMEA value different product and supplier traits as well, with greater emphasis on sustainability. Consequently, it's important that each business unit tailor its strategy to best meet the distinct customer expectations in their markets. Creating two separate businesses will enable each region to accelerate its path to long-term profitable growth. I'm now on slide nine. I want to address what is changing and what is not. As we discussed, our 80-20 methodology starts with Simplify, which we have been working toward over the past year, de-emphasizing or exiting select businesses, markets, and functions, and then redirecting our resources to a sharper focus and higher value. The action we are discussing today is the next step in the 80-20 performance system, segmenting the business to further optimize resource allocation and enable long-term profitable growth. While these actions separates the businesses from one entity into two discrete, highly focused companies, both businesses will continue to emphasize the powerful operating discipline of 80-20 and our three strategic pillars. Our 80-20 approach, with a clear focus on cost optimization and operating efficiency, strategy execution, and customer centricity, will remain core to both businesses. scale businesses will benefit from true alignment to the characteristics of their distinct customers and regions, local leadership, and optimized capital allocation strategies without regional tradeoffs. Most importantly, both companies will continue to be customer-driven organizations focused on delivering exceptional customer service with attention to detail around on-time delivery, quality, and engagement. Turning to slide 10, let me provide an overview of what the post-separation international paper will look like. IP will be the leading scale sustainable packaging solutions provider in North America, relentlessly focused on customers with advantage cost position and leading innovation capabilities. The business will be comprised of the current packaging solutions in North America, including both legacy IP and DS Smith assets. As you can see from the proform results on the slide, the business that will become standalone IP had full year 2025 net sales of more than $15 billion and approximately $2.3 billion of adjusted EBITDA that is poised to accelerate rapidly over the next 24 months. The sharper regional focus will enable IP to further accelerate value creation for our shareholders. We have already made significant progress executing our transformation strategy and expect the benefits to flow through adjusted EBITDA over the coming year. We'll provide more detail about that in the earnings portion of the presentation. Additionally, we expect that the acceleration of our transformation to result in expanded margins, growing free cash flow, which will support disciplined investments in organic and inorganic growth opportunities. We have a robust plan in place to continue delivering our strategic ambitions, which you can see on slide 11. This is a continuation of our 80-20 approach in our virtuous cycle. We will continue to assess our mill and plant footprint and transform day-to-day operations, deliver differentiated customer service, and develop and deploy local commercial strategies. These actions will enable strategic reinvestment in the business to accelerate organic growth, drive productivity, and support disciplined bolt-on acquisitions. This will all be supported by a strong investment-grade balance sheet and a capital structure that supports an attractive dividend. Our ultimate goal will continue to be to provide customers with the best possible solutions and creating value for our shareholders as a preeminent packaging company in North America. I'll now turn the call over to Tim to talk about the post-separation EMEA packaging business.