International Paper Company

Q3 performance: execution improved, but cash flow weak - Management said Q3 delivered an “inflection” in earnings despite weak consumer confidence and rising inflation. - Adjusted earnings: Q3 adjusted operating EPS = $0.37; adjusted EBITDA margin improved ~400 bps sequentially to 13.6%. - Free cash flow (FCF) negative: FCF was -$267M in Q3 (driven by cash payments for prior heavy maintenance, interest on legacy DS Smith debt, and an inventory build after planned outages). - Full-year FCF outlook (unchanged from their message): ~$100M to $200M for 2026.

North America Packaging: outperforming industry demand; margin drivers plus temporary headwinds - Demand/shipments: North America box shipments -2% YoY, but ~1 point better than their estimate of industry demand (i.e., they expect to hold up better than the market). - Q3 earnings drivers: mainly price realization, lower planned outage activity, and no spend tied to the now-completed Riverdale conversion; partially offset by higher inflation and softer demand. - Q4/North America outlook: expects outperformance vs industry by >1% in Q4 and ~2% for the full year, plus modest recovery in West Coast agriculture and a seasonal pickup. - Key near-term challenges: West Coast agriculture disruption (fresh fruit/veg), softness in protein, and elevated energy/input costs continue to pressure customers and volumes.

North America margin outlook: revised full-year EBITDA guidance down - Q4 Packaging Solutions North America adjusted EBITDA: ~$700M to $740M (benefits from price/mix, Riverdale/NORPAX synergies, and no repeat of Pine Hill expense; still assumes ongoing inflationary pressure). - Full-year 2026 Packaging Solutions North America adjusted EBITDA guide (updated): $2.27B to $2.31B. - What changed vs prior outlook: incremental headwinds of ~$145M, driven largely by higher diesel fuel and distribution costs, plus volume pressure; also included ~$20M net impact from Pine Hill event (after insurance recovery) and timing/outage effects. - Price benefit helps offset: includes ~$35M price benefit from faster realization of June increases and partial September realization.