citi basic materials conference | november 29,...

Citi Basic Materials Conference | November 29, 2017


Forward-Looking Statements

Certain statements in these slides and made during this presentation may be considered forward-looking statements. These

statements 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) the level of our indebtedness and changes in interest rates; (ii) industry conditions, including but not

limited to changes in the cost or availability of raw materials, energy and transportation costs, competition we face, cyclicality

and changes in consumer preferences, demand and pricing for our products; (iii) global economic conditions and political

changes, including but not limited to the impairment of financial institutions, changes in currency exchange rates, credit ratings

issued by recognized credit rating organizations, the amount of our future pension funding obligation, changes in tax laws and

pension and health care costs; (iv) unanticipated expenditures related to the cost of compliance with existing and new

environmental and other governmental regulations and to actual or potential litigation; (v) whether we experience a material

disruption at one of our manufacturing facilities; (vi) risks inherent in conducting business through joint ventures; (vii) the failure

to realize the expected synergies and cost-savings from our purchase of the pulp business of Weyerhaeuser Company or

delay in realization thereof; (viii) purchase price adjustments relating to our pending transaction to transfer our North American

consumer packaging business to Graphic Packaging Holding Company in exchange for, among other things, an equity interest

in an entity that will hold the assets for the combined business; (ix) the successful fulfillment or waiver of all conditions to

closing the Graphic Packaging transaction without unexpected delays or conditions; (x) the successful closing of the Graphic

Packing transaction within the estimated timeframe; (xi) the uncertainty of the expected financial performance of the combined

business following completion of the Graphic Packaging transaction; (xii) the failure of the combined business to realize the

expected synergies, cost-savings and other benefits from the Graphic Packaging transaction or delay in realization thereof;

(xiii) the successful financing of the Graphic Packaging transaction; (ix) unforeseen tax treatment relating to the Graphic

Packaging transaction, (xv) litigation related to the Graphic Packaging transaction or limitations or restrictions imposed by

regulatory authorities that may delay or negatively impact the Graphic Packaging transaction; and (xvi) our ability to achieve

the benefits we expect from all other strategic acquisitions, divestitures and restructurings. These and other factors that could

cause or contribute to actual results differing materially from such forward- looking statements are discussed in greater detail

in the Company’s Securities and Exchange Commission filings. We undertake no obligation to publicly update any forward-

looking statements, whether as a result of new information, future events or otherwise.

2


Statements Relating to Non-GAAP Financial Measures

During the course of this presentation, certain non U.S. GAAP financial measures

will be presented, such as Adjusted Operating EPS, Adjusted EBIT, Adjusted

EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Adjusted ROIC.

A reconciliation of all presented non-GAAP measures (and their components) to

U.S. GAAP financial measures is available on the company’s website at

internationalpaper.com under Performance/Investors.

3


International Paper | Value-creating Strategy and Portfolio

• Fiber-based Packaging, Pulp and Paper

• Advantaged Positions in Attractive Markets

Strategy

Focused Portfolio ― Revenue1

Industrial Packaging2

Global Cellulose Fibers Printing Papers

1 3Q17 YTD excluding N.A. Consumer Packaging 2 Includes EMEA Coated Paperboard Packaging

70%

11% 19%

4


Positioned for strong 4Q results

Healthy demand in Industrial Packaging and

Global Cellulose Fibers

Flow through of 1H price increases and

continued momentum

Global Cellulose Fibers synergies

Lower overall input costs

Seasonally light maintenance schedule

Anticipate strong operational results at Ilim

Expect to close transaction with Graphic Packaging in early 2018

Full Year 2017 Update | Solid Second Half Performance with Strong Exit

5

On Track to Deliver 10%+ YoY EBITDA Growth

1 From continuing operations before special items and non-operating pension expense

$3,495

2016A 2017E

Adjusted EBITDA1

($MM)

10%+


2018 Outlook | Momentum Continues

6

Confident in Another Year of Meaningful Growth in EBITDA

Free Cash Flow Strong generation

Demand Strong outlook in core businesses

CatalystsCost reduction initiatives, GCF synergies,

Madrid Mill conversion

Margin Full-year price flow through


15%

85%

2018 Capex 1.5BNew Approach

7

Reallocating Capex to Industrial Packaging and Global Cellulose Fibers

Aligned with strategic framework: Advantaged Position in Attractive Markets

Focus on strongly positioned businesses and most advantaged assets

Optimize core businesses and fund mill competitiveness

Capital Investment | Increase Value-creation Approach to Capex

Core

Non-core

30%

70%

2018 Capex $1.5BPrevious Approach


2018 Capital Investment | Optimizing Advantaged Assets

$0

$200

$400

$600

$800

$1,000

$1,200

0 20,000 40,000 60,000 80,000 100,000

Cumulative Annual Containerboard Global Production (Thousand Tons)

IP N.A. Containerboard Mills

Cash Cost (Delivered to Chicago)

Source: IP Analysis, FisherSolve™ 2Q17 data

Maintenance &

Regulatory

Maintaining world-class,

low-cost, advantaged assets

Madrid Mill ConversionLast Newsprint Reel 3Q17

$0.9B $0.2B $0.4B

Cost Reduction Strategic

Creating value through pipeline

of high return projects

≥ 30% IRR

Reinvesting in core businesses

with higher growth profile

$0.2B $0.4B

8


Maintenance Outages | Maintaining World-class Mill System

9

12016A Global Cellulose Fibers does not include Weyerhaeuser GCF acquisition

Optimizing maintenance outage schedule across forty-six mill global system

with a mix of 12, 15, 18 and 24 month outage schedule

Extended outages planned in 2018

$233 $237 $302

$250

$78 $112

$137

$115

$96

$93

$131

$100 $35

$39

$0

$100

$200

$300

$400

$500

$600

2016A 2017F 2018F Normalized

Maintenance Outage Expense ($MM)

Industrial Packaging Global Cellulose Fibers Papers Consumer Packaging

1


Capital Allocation | Competitive and Sustainable Dividend

10

$1.00 $0.98

$1.90

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

$2.00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E

Dividends Paid ($MM) Dividends / Share

3Q17 Increase the Sixth Consecutive since Restoration Post Great Recession

MM


AppendixInvestor Relations Contacts

Guillermo Gutierrez +1-901-419-1731

Michele Vargas +1-901-419-7287

Media Contact

Tom Ryan +1-901-419-4333

11


IP Overview

12

$ Billion(Except as noted)

2016

Sales $21.1

Adj. EBITDA1 $3.5

Adj. EBITDA Margin 16.6%

FCF $1.9

Dividend per share3 $1.90

1 From continuing operations before special items and non-operating pension expense2 Based on 2016 Adjusted EBITDA Margins3 Annualized dividend as of 4Q17

NorthAmerica

83%

Brazil8%

EMEA6%

Russia3%

% Total

Adjusted

EBITDA2

Global

Headquarters

Memphis, TN

46 Mills55,000

Employees

Worldwide

238

Converting

Plants

18

Recycling

Plants


Key Financial Metrics

13

$ Million(Except as noted)

2016 2017F 2018F

Maintenance Outage Expense $442 $481 $5701

Maintenance & Regulatory $0.9B $0.9B $0.9B

Cost Reduction $0.1B $0.2B $0.2B

Strategic $0.4B $0.4B $0.4B

Depreciation & Amortization $1.2B ~$1.4B ~$1.35B

Net Interest Expense $520 ~$575-600 ~$525-550

Corporate Expense $69 ~$60 ~$120

Effective Tax Rate 32% ~31% ~33%

Cap

ex

1

1Excludes Consumer Packaging

citi basic materials conference | november 29,...

Documents