International Paper 10-Q 2025-09-30

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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 September 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 October 31, 2025 was 528,038,317.

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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 (Loss)

(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 and subsequent quarterly reports, particularly under "Risk Factors" and "Forward-Looking Statements" of this Form 10-Q. Please see our "Cautionary Statement Regarding Forward-Looking Statements" below.

EXECUTIVE SUMMARY

Earnings (loss) from continuing operations were $(426) million ($(0.81) per diluted share) in the third quarter of 2025, compared with $75 million ($0.14 per diluted share) in the second quarter of 2025 and $111 million ($0.31 per diluted share) in the third quarter of 2024. The Company generated Adjusted operating earnings (loss) (a non-GAAP measure defined below) of $(224) million ($(0.43) per diluted share) in the third quarter of 2025, compared with $94 million ($0.18 per diluted share) in the second quarter of 2025 and $113 million ($0.33 per diluted share) in the third quarter of 2024.

Beginning in the third quarter of 2025, management has elected to present guidance based on Adjusted EBITDA from continuing operations (non-GAAP) in addition to Adjusted operating earnings (loss). Adjusted EBITDA provides a more meaningful measure of operating performance, particularly in evaluating the Company’s results and future outlook during this period of transformation.

During the third quarter, International Paper sequentially improved adjusted EBITDA from continuing operations driven by continued price realization, cost management and lower fiber costs. The third quarter represents another important step in our transformation journey, as we continue to execute the strategy launched last year. We committed to an ambitious transformation plan to reinforce our position as the leading global provider of sustainable packaging solutions through an advantaged cost position, high relative supply position in the most strategically attractive geographies, and delivering an unmatched customer experience.

Third quarter results include financial improvements related to both our commercial and cost out targets. On the commercial side, we are investing in a best-in-class experience for our customers. This resulted in key strategic wins across regional, national and local customers, as we continue to benefit from price realization from prior index moves. On the cost side, we continued our footprint optimization in North America and EMEA. We closed additional mills and box plants, sold or exited some of our non-strategic businesses, further simplified our overhead structure and rolled out our 80/20 lighthouse model to drive improved operational efficiency and service levels.

Earnings (loss) from continuing operations before income taxes and equity earnings (loss) was ($675) million in the third quarter of 2025 and includes $675 million of accelerated depreciation associated with the closure of our mills in Savannah and Riceboro, Georgia and other packaging facilities. Adjusted EBITDA from continuing operations (non-GAAP) in the third quarter of 2025 was $859 million, representing a 28% sequential increase. The sequential improvement in adjusted EBITDA from continuing operations was driven by increased price in both PS NA and PS EMEA on prior index movements, along with favorable operations and costs in PS NA. The improved third quarter of 2025 results also reflect lower planned maintenance outage costs in PS NA as we adjusted our outage schedule to accelerate the mill footprint actions taken in the quarter. Input costs negatively impacted third quarter of 2025 results as higher energy costs in PS NA were partially offset by lower fiber costs in PS EMEA. Finally, during the third quarter of 2025, we entered into an agreement to divest the Global Cellulose Fibers business. In connection with the divestment, we recognized a $1.0 billion impairment to adjust the net assets of this business to fair value. We expect to close on the sale of the business by year-end 2025, subject to regulatory approvals.

Turning to the fourth quarter of 2025 outlook, we expect lower adjusted EBITDA from continuing operations in PS NA. Volumes are anticipated to be lower as the commercial impact of the recent mill closures and three less shipping days are only partially offset by improvements tied to strategic wins and seasonality. We predict operations and costs to be sequentially lower primarily due to the favorable cost-out benefit from third quarter of 2025 mill closures, partially offset by seasonally higher labor costs, higher reliability spending and the non-repeat of benefits from strategic initiatives reported in third quarter. We expect heavier maintenance outage spending in fourth quarter of 2025 as planned. We foresee higher adjusted EBITDA from continuing operations in PS EMEA driven by continued realization of prior index movements, seasonally higher volumes and

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lower fiber costs, partially offset by higher operations and costs due to increased costs tied to higher volumes and the non-repeat of favorable items from the third quarter of 2025.

Recent Strategic Portfolio Actions

During the third quarter of 2025, International Paper Company continued to execute strategic initiatives designed to optimize our portfolio and reinforce our position as a leading global provider of packaging solutions. As part of the Company's strategy, the Company intends to guide investments and align resources to win with our most strategic customers, while reducing complexity and cost across the Company.

To that end, during the third quarter we took actions to simplify our organizational structure by exiting select businesses and markets and initiating the outsourcing of a portion of our information technology services. By streamlining our portfolio, we believe the Company is better positioned to deliver innovative, fiber-based packaging solutions that meet the evolving needs of our customers.

Divestiture of Global Cellulose Fibers Business: On August 20, 2025, the Company entered into a definitive agreement to sell its Global Cellulose Fibers business to American Industrial Partners (“AIP”) for $1.5 billion, subject to customary closing adjustments. As part of the consideration, the Company will receive preferred stock in the acquiring entity with an initial liquidation preference of $190 million. In connection with our decision to divest the Global Cellulose Fibers business, we recorded an estimated impairment charge of $1.0 billion in the third quarter of 2025, which is included within discontinued operations, net of tax. The pre-tax charge was based on an estimate of expected proceeds and is subject to change with final proceeds and closing adjustments. We intend to allocate the proceeds from the divestiture toward strategic reinvestment in our packaging business, targeted debt reduction to support our credit profile and preserve financial flexibility and to maintain a strong investment-grade credit rating.

The consummation of the Transaction is subject to customary closing conditions, including, among others, the receipt of approvals or the expiration or termination of applicable waiting or review periods under applicable competition laws, including the expir

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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 September 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 continuing 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 September 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 14 - 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 14 – Commitments and Contingencies of the Condensed Notes to the Consolidated Financial Statements 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 Reports on Form 10-Q for the quarters ended March 31, 2025, and June 30, 2025 (Part II, Item 1A), other than as described below.

The divestiture of our Global Cellulose Fibers business may be delayed or fail to occur for a variety of reasons, including the failure by the parties to satisfy or waive various closing conditions such as governmental and regulatory approvals. There can be no assurance as to whether or when the transaction may be completed. Failure to consummate the transaction could adversely affect our business, results of operations, financial condition, and the market price of our shares.

On August 21, 2025, the Company announced it had entered into a Securities Purchase Agreement (the “Sale Agreement”) with American Industrial Partners (“AIP”), pursuant to which, among other things, the Company will sell to AIP all of the issued and outstanding equity interests of its Global Cellulose Fibers business. Pursuant to the Sale Agreement, AIP will acquire the Company’s Global Cellulose Fibers business for a purchase price of $1.5 billion, which is subject to certain closing adjustments, and includes the issuance by AIP to the Company of preferred stock of AIP with an aggregate initial liquidation preference of $190 million. We may not realize all or a portion of the value of the preferred stock in the near term or at all.

Our ability to consummate the transaction is dependent on a number of factors that are beyond our control, such as receipt of required governmental and regulatory approvals and satisfaction of other closing conditions. As a result, there can be no assurance that the closing of the transaction will not be delayed or fail to occur. In addition, there can be no assurance that the transaction will have a positive effect on shareholder value. For example, the divestiture of our Global Cellulose Fibers business has resulted in an asset impairment charge of approximately $1.0 billion.

The divestiture of our Global Cellulose Fibers business could 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.

In addition, we have and will continue to incur significant costs and expenses in connection with the transaction. Speculation and perceived uncertainties regarding any developments related to the transaction could cause the market price of our common stock to fluctuate significantly or to decline. Failure to complete the transaction within the expected timeframe or at all could adversely affect our business, results of operations, financial condition, and the market price of our common stock.

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

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.

(a) 24,672 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. 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 September 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) Not applicable

(b) Not applicable.

(c) During the quarter ended September 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.