International Paper 10-Q 2025-06-30

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission File Number 001-03157

INTERNATIONAL PAPER COMPANY

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (901) 419-9000

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (paragraph 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange

Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, par value $1.00 per share, as of August 1, 2025 was 527,982,095.

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INDEX

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PART I. FINANCIAL INFORMATION

INTERNATIONAL PAPER COMPANY

Condensed Consolidated Statement of Operations

(Unaudited)

(In millions, except per share amounts)

The accompanying notes are an integral part of these condensed financial statements.

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INTERNATIONAL PAPER COMPANY

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

(In millions)

The accompanying notes are an integral part of these condensed financial statements.

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INTERNATIONAL PAPER COMPANY

Condensed Consolidated Balance Sheet

(In millions)

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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in "Financial Statements and Supplementary Data" of this Quarterly Report on Form 10-Q (this "Form 10-Q") and the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (our "Annual Report"). In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and in our Annual Report, particularly under "Risk Factors" and "Forward-Looking Statements" of this Form 10-Q and our Annual Report. Please see our "Cautionary Statement Regarding Forward-Looking Statements" below.

EXECUTIVE SUMMARY

Net earnings (loss) were $75 million ($0.14 per diluted share) in the second quarter of 2025, compared with $(105) million ($(0.24) per diluted share) in the first quarter of 2025 and $498 million ($1.41 per diluted share) in the second quarter of 2024. The Company generated Adjusted operating earnings (a non-GAAP measure defined below) of $105 million ($0.20 per diluted share) in the second quarter of 2025, compared with $101 million ($0.23 per diluted share) in the first quarter of 2025 and $193 million ($0.55 per diluted share) in the second quarter of 2024.

International Papers’ second quarter results, compared to the first quarter of 2025, reflect higher sales and earnings through the successful execution of sales price increases along with favorable volume in our Packaging Solutions North America segment ("PS NA"). The second quarter of 2025 reflects one additional month of DS Smith activity in both our PS NA and Packaging Solutions EMEA ("PS EMEA") segments. Industry demand in North America has been relatively stable, but softer than last year as economic uncertainty from tariffs continues to impact industrial production and box demand across the manufacturing sector. In our PS EMEA segment, weaker market demand driven by macroeconomic volatility was a headwind in the second quarter of 2025. Box shipments slowed sequentially in the second quarter by approximately 1%, primarily driven by softness in April and May although we saw signs of volume recovery in June. We continue to actively monitor recent changes in trade policy, particularly newly implemented tariffs affecting goods imported in the United States. While the full scope of the financial impact remains under evaluation, our risk management and supply chain teams are engaged in contingency planning to mitigate potential disruptions. We continued to make progress in our commercial efforts through a focus on our customers and growing the business in attractive markets. We also took several cost-out actions in the second quarter, including announced facility closures in North America and EMEA, as part of our overall effort to reduce complexity and minimize costs, which enables us to reinvest to build an advantaged cost position. We remain committed to the pursuit and execution of our commercial and cost-out actions.

The following is a discussion, by segment, of the second quarter of 2025 performance compared to the first quarter of 2025 as well as the third quarter of 2025 outlook. Second quarter of 2025 operating profit in our PS NA segment was $277 million versus $142 million in the first quarter of 2025. Price and mix was higher from the realization of prior index movements, especially in local accounts and we expect this to continue in the third quarter of 2025. Volume was seasonally higher in the second quarter of 2025 and we expect this trend to continue in the third quarter of 2025 as we onboard our strategic wins. Operations and costs in the second quarter of 2025 was unfavorable sequentially, primarily driven by the non-repeat of favorable items from the first quarter of 2025 along with additional costs associated with footprint and business optimization actions, inventory valuation adjustments and increased employee benefit costs in the second quarter of 2025. Operations and costs also included unplanned costs from the natural gas curtailment we experienced at our Valliant, Oklahoma mill. These unfavorable costs were partially offset by footprint optimization benefits from the Campti, Louisiana mill closure and other prior cost-out initiatives. For the third quarter, operations and costs are anticipated to be favorable due to the non-repeat of unfavorable items in the second quarter, continued benefits from cost-out actions and focused performance improvement. Planned maintenance outage costs were sequentially higher with the second quarter being the heaviest outage quarter of 2025 and are expected to be lower in the third quarter coming off the peak activity. Input costs were lower in the second quarter of 2025 due to lower energy and fiber costs but we expect higher input costs in the third quarter due to increased energy costs. Depreciation and amortization was lower in the second quarter of 2025 associated with the non-repeat of the accelerated depreciation from the Campti, Louisiana mill closure, offset by an additional month of depreciation for DS Smith North American assets and updates to DS Smith purchase price accounting values.

Second quarter 2025 operating loss in our PS EMEA business was $1 million versus operating profit of $46 million in the first quarter of 2025. Price and mix was sequentially higher in the second quarter of 2025 due to prior index movements and higher external paper sales. We expect price and mix to be higher in the third quarter of 2025 on continued realization of prior index

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movements. Volume was lower in the second quarter of 2025 due to the overall soft demand environment. We expect improved volume in the third quarter of 2025 due to an improving demand environment along with the benefits of confirmed strategic wins. Operations and costs in the second quarter of 2025 were sequentially higher driven by the non-repeat of favorable first quarter of 2025 items, including energy credits recognized in the prior quarter. In the region, input costs were higher in the second quarter driven by higher fiber costs that were offset by lower energy costs. Operations and costs are expected to be lower in the third quarter of 2025 as we realize the benefits of cost- out initiatives. Input costs were sequentially flat versus the first quarter of 2025, and we expect some improvement in the third quarter of 2025 on lower fiber costs. Depreciation and amortization was higher in the second quarter of 2025 associated with an additional month of depreciation for DS Smith EMEA assets and updates to DS Smith purchase price accounting values.

Second quarter of 2025 operating loss in our Global Cellulose Fibers business was $4 million versus operating profit of $17 million in the first quarter of 2025. Price and mix was higher versus the first quarter of 2025 on the realization of prior index movements. We expect price and mix to be lower in the third quarter of 2025 on lower price realization from prior index movements and lower energy credits sales compared to the first half of 2025. Volume was sequentially lower in the second quarter of 2025 due to higher maintenance outage activity. We expect volumes to be higher in the third quarter of 2025 in response to lower outage activity in the quarter. Operations and costs were sequentially higher in the second quarter of 2025 due to the timing of spend on turbine maintenance, partially offset by improved mill reliability. We expect improved operations and costs in the third quarter on the non-repeat of t

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Information relating to quantitative and qualitative disclosures about market risk is shown on pages 50-51 of International Paper’s Annual Report, which information is incorporated herein by reference. There have been no material changes in the Company’s exposure to market risk since December 31, 2024.

Evaluation of Disclosure Controls and Procedures:

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported (and accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure) within the time periods specified in the SEC’s rules and forms. As of the end of the period covered by this Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2025 (the end of the period covered by this Form 10-Q).

Changes in Internal Control over Financial Reporting:

As previously disclosed, on January 31, 2025, we completed the acquisition of the entire issued and to be issued share capital of DS Smith. See Note 8 - Acquisitions to the Condensed Consolidated Financial Statements for additional information. We are in the process of integrating DS Smith into our systems and control environment, including an assessment of DS Smith's internal controls over financial reporting. This ongoing integration process may result in changes in our internal control over financial reporting.

Except as described above, there have been no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.****LEGAL PROCEEDINGS

A discussion of material developments regarding certain legal proceedings involving the Company occurring in the period covered by this Form 10-Q is found in Note 13 - Commitments and Contingencies of the Condensed Notes to the Consolidated Financial Statements in this Form 10-Q, which is incorporated by reference herein. Except as set forth in Note 13 – Commitments and Contingencies of the Condensed Notes to the Consolidated Financial Statements and Note 20 - Subsequent Events in this Form 10-Q, the Company is not subject to any administrative or judicial proceeding arising under any Federal, State or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment that is likely to result in monetary sanctions of $1 million or more.

There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K (Part I, Item 1A) for the period ended December 31, 2024 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (Part II, Item 1A), other than as described below.

RISKS RELATED TO LEGAL PROCEEDINGS AND COMPLIANCE COSTS

Results of legal proceedings could have a material effect on our consolidated financial results.

We are a party to various legal, regulatory and governmental proceedings and other related matters, including with respect to antitrust and environmental matters. In addition, we are and may become subject to other loss contingencies, both known and unknown, which may relate to past, present and future facts, events, circumstances and occurrences. Should an unfavorable outcome occur in connection with the legal, regulatory or governmental proceedings or our other loss contingencies or we become subject to any such loss contingencies in the future, there could be a material adverse impact on our financial results. See Note 13 - Commitments and Contingent Liabilities to the Condensed Notes to the Consolidated Financial Statements for further information.

For example, we (through both International Paper and our DS Smith subsidiaries operating in Italy) are among a number of companies operating in the paper packaging industry subject to a decision by the Italian Competition Authority concerning anti-competitive behavior in Italy. We are further subject to a number of actual and threatened claims for compensation arising out of or relating to the decision by the Italian Competition Authority. In addition, International Paper has been named as a defendant in a purported class action complaint that alleges civil violation of Sections 1 and 3 of the Sherman Act. The complaint alleges that the defendants, beginning in November 1, 2020 through the time of filing, conspired to fix, raise, maintain, and/or stabilize prices of containerboard products and finished packaging products and seeks to recover treble damages, injunctive relief, attorneys’ fees and actual damages.

Given the early stage of the claim and our intention to defend robustly against such claim, it is too early to predict or reasonably estimate the overall outcome or ultimate potential liability (if any) that might be incurred in connection therewith, and there can be no guarantee that the aggregate of possible damages could not have a material impact on our financial condition.

There are risks associated with our review of strategic options for our Global Cellulose Fibers business, and there is no assurance that this review will result in any transaction or other outcome.

We are pursuing strategic options for our Global Cellulose Fibers business following our strategic review of the business. There can be no assurance that this process will result in any kind of transaction or other outcome, or, if any transaction or other outcome occurs, the timing or terms thereof. Moreover, our ability to affect any transaction or other outcome may be dependent on a number of factors that may be beyond our control, such as market conditions, industry trends, regulatory approvals, and the availability of financing on favorable terms. In addition, even if this review ultimately results in a transaction or other outcome, there can be no assurance that such transaction or other outcome will have a positive effect on shareholder value. Further, any transaction related to our Global Cellulose Fibers business, changes in the macroeconomic environment or the impact of tariffs could result in asset impairment charges.

There can also be no assurance that this process will not cause the diversion of management’s attention, interfere with our ability to retain or attract key personnel, disrupt our business, adversely impact important business relationships, adversely impact our financial results, or expose us to litigation.

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In addition, we may incur significant costs and expenses in connection with this process. It is also possible that speculation and perceived uncertainties regarding any developments related to this review could cause the market price of our common stock to fluctuate significantly or to decline.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.

(a) 18,748 shares were acquired from employees or members of our Board as a result of share withholdings to pay income taxes under the Company's 2024 Long-Term Incentive Compensation Plan (the "2024 LTICP"), approved and effective as of May 13, 2024. The 2024 LTICP replaced the Amended and Restated 2009 Incentive Compensation Plan. During these periods, no shares were purchased under our share repurchase program, which does not have an expiration date. On October 11, 2022, our Board increased the authorization to repurchase shares up to a total of $3.35 billion shares. As of June 30, 2025, approximately $2.96 billion aggregate shares of our common stock remained authorized for repurchase under this Board authorization.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a) The Company amends and restates its Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on February 28, 2025.

Chief Financial Officer Promoted to New Role

On February 25, 2025, the Board of Directors (the “Board”), upon recommendation from the Management Development and Compensation Committee (the “Committee”) of International Paper Company (the “Company”), appointed Timothy S. Nicholls, 63, as executive vice president and president – DS Smith, an International Paper company, leading our business in Europe, Middle East and Africa (“EMEA”), effective April 1, 2025. This is a newly created role at the Company. In his new role, Mr. Nicholls will play a pivotal role in leading integration efforts and drive growth in the attractive EMEA region. Mr. Nicholls will oversee all operations within the EMEA region, ensure seamless integration into the Company’s existing infrastructure, and leverage synergies to enhance operational efficiency and drive strategic initiatives.

Mr. Nicholls brings a wealth of experience and knowledge having served as senior vice president and chief financial officer twice, from 2007 to 2011 and since 2018. Mr. Nicholls previously served as senior vice president - Industrial Packaging of the Americas (2017-2018), senior vice president - Industrial Packaging (2014-2016), senior vice president - Printing and Communications Papers of the Americas (2011-2014), vice president and executive project leader of IP Europe (2007), and vice president and chief financial officer - IP Europe (2005-2006). Mr. Nicholls joined International Paper in 1999 following our acquisition of Union Camp Corporation, where he had worked since 1991. He will continue reporting directly to Andrew K. Silvernail, chief executive officer and chairman of the Board.

The Company has not entered into any agreements with Mr. Nicholls or made any changes to the compensation payable to Mr. Nicholls in connection with his appointment to this new position. As previously disclosed in a Current Report on Form 8-K filed on December 13, 2024, the Committee approved an ordinary course salary increase for Mr. Nicholls in accordance with its customary incentive review practices on December 9, 2024. Additional details on Mr. Nicholls’s compensation are set forth in

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the Compensation Discussion & Analysis section of the Company’s 2024 proxy statement filed with the U.S. Securities and Exchange Commission on April 2, 2024.

There are no arrangements or understandings between Mr. Nicholls and any other persons pursuant to which he was selected as executive vice president and president – DS Smith. There are also no family relationships between Mr. Nicholls and any director or executive officer of the Company, and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

New Chief Financial Officer Appointed

Also upon recommendation from the Committee, the Board on February 25, 2025, appointed Lance T. Loeffler, 48, as senior vice president and chief financial officer of the Company, effective April 1, 2025. Mr. Loeffler succeeds Mr. Nicholls in this role. He will report directly to Mr. Silvernail.

Mr. Loeffler joins the Company from Halliburton (NYSE: HAL), provider of services and products to the energy industry, where he most recently served as senior vice president, Middle East and North Africa (2022-2024). Prior to this role, Mr. Loeffler held other positions at Halliburton including executive vice president and chief financial officer (2018-2022), vice president, investor relations (2016-2018) and vice president, corporate development (2014-2016). Prior to his employment with Halliburton, Mr. Loeffler was a director at Deutsche Bank Securities (2010-2014).

The Company entered an employment offer letter dated February 26, 2025 (the “Offer Letter”), with Mr. Loeffler. The Offer Letter has no specified term and Mr. Loeffler’s employment with the Company will be on an at-will basis. The material terms of the Offer Letter are summarized below. The summary does not purport to be complete and is qualified in its entirety by reference to the Offer Letter, a copy of which is attached as Exhibit 10.1 and incorporated herein by reference.

Base Salary and Bonus. Mr. Loeffler will receive an annual base salary of $850,000 and will be eligible for an annual bonus under the Company’s Annual Incentive Plan (“AIP”) with a target amount of 100% of his annual base salary. For 2025, Mr. Loeffler will receive a pro-rata portion of his bonus under the AIP, subject to achievement of the applicable performance metrics on the same terms and conditions as the Company’s Executive Leadership Team.

One-Time Inducement Equity Grant. Mr. Loeffler will receive a one-time, special “inducement grant” of restricted stock units (“RSUs”) with a grant date fair market value of $1,700,000 (“2025 Inducement RSU Award”). The target number of RSUs will be determined by dividing $1,700,000 by the Company’s closing stock price on the business day immediately preceding the grant date. The RSUs will vest ratably over three years commencing on the first anniversary of the grant date, subject to continued service on each applicable vesting date and will vest in full upon an involuntary termination of Mr. Loeffler’s employment by the Company without cause or by Mr. Loeffler for good reason (each, a “Qualifying Termination”) or due to Mr. Loeffler’s death or disability.

Long-Term Incentive Plan. Mr. Loeffler will receive a Long-Term Incentive Plan grant of performance stock units (“PSUs”) for 2025 with a grant date fair value of $3,500,000. The target number of PSUs will be determined by utilizing the closing stock price of the business day immediately preceding the grant date. The PSUs will be eligible to vest on the third anniversary of the grant date, subject to achievement of the applicable performance metrics and Mr. Loeffler’s continued service on such date.

Severance Terms. In the event Mr. Loeffler experiences a Qualifying Termination, he will be entitled to the payments and benefits set forth in the Company’s Executive Severance Plan for Tier II Participants, including (i) a lump sum cash severance payment equal to one and a half times the sum of his base salary and target bonus under the AIP, (ii) a pro-rata annual bonus based on actual performance in the year of termination, (iii) health and welfare benefit continuation for a period of 18 months and (iv) outplacement services for a period of 12 months. In addition, in the event Mr. Loeffler’s employment is terminated by the Company due to a Qualifying Termination or due to divestiture, death, disability, or retirement after reaching age 65, Mr. Loeffler’s (i) outstanding and unvested PSUs will vest pro-rata based on the number of months Mr. Loeffler was in active service during the applicable performance period and subject to the achievement of the applicable performance metrics and (ii) outstanding and unvested RSUs will vest in full.

In the event that Mr. Loeffler experiences a Qualifying Termination, dies, becomes disabled or retires within two years of a change in control of the Company, Mr. Loeffler’s cash severance will be two times the sum of his base salary and target AIP and he will receive two years of Company-subsidized health and welfare benefits continuation and outplacement services.

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Other Benefits. Mr. Loeffler will be eligible to participate in the benefit programs available to executive officers of the Company, including, without limitation, participation in the Company’s 401(k) plan and nonqualified deferred compensation savings plan. Mr. Loeffler will also be provided with the Company’s standard relocation benefits.

There are no arrangements or understandings between Mr. Loeffler and any other persons pursuant to which he was selected as chief financial officer. There are also no family relationships between Mr. Loeffler and any director or executive officer of the Company, and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Except as set forth above, the Company has not entered into any agreements with Mr. Loeffler in connection with his appointment.

For further details, Mr. Loeffler’s Employment Offer Letter dated February 26, 2025 is filed as Exhibit 10.3 in Part II, Item 6 (Exhibits) of this Form 10-Q.

(b) Not applicable.

(c) During the quarter ended June 30, 2025, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements, as defined in Item 408 of Regulation S-K.

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ITEM 6. EXHIBITS

** Filed herewith*

*** Furnished herewith*

+ Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.