first quarter 2017 earnings | april 27, 2017...earnings presentation | first quarter 2017 emea...

First Quarter 2017 Earnings | April 27, 2017

Earnings Presentation | First Quarter 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) changes in our

estimates for the costs and insurance coverage associated with the January 2017 incident at our

Pensacola, Florida mill; (vi) whether we experience a material disruption at one of our other manufacturing

facilities; (vii) risks inherent in conducting business through joint ventures; (viii) the failure to realize the

expected synergies and cost-savings from our purchase of the cellulose fibers business of Weyerhaeuser

Company; and (ix) 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 our 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


Ilim JV Information

All financial information and statistical measures regarding our 50/50 Ilim joint

venture in Russia (“Ilim”), other than historical International Paper Equity Earnings

and dividends received by International Paper, have been prepared by the

management of Ilim. Any projected financial information and statistical measures

reflect the current views of Ilim management and are subject to risks and

uncertainties that could cause actual results to differ materially from those

expressed or implied by such projections. See “Forward-Looking Statements.”

4


First Quarter 2017 Results

1 Adjusted operating EPS based on Adjusted Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and

non-operating pension expense)

5

Transitional quarter with overall results

as expected

Price realizations and recent announcements

across key businesses:

N.A. Industrial Packaging

Global Cellulose Fibers (GCF)

Brazil and EMEA Papers

N.A. Consumer Packaging

Good management of Pensacola mill digester

incident and successful start-up achieved

Integration of GCF progressing well with

$14MM of synergies in the quarter

OCC a significant headwind (~$30MM impact);

1Q17 average prices up $40/ton vs. 4Q16

Received $127MM dividend YTD from Ilim JV

$0.80$0.73

$0.60

1Q16 4Q16 1Q17

Adj. Operating EPS1


1Q17 Financial Results

1Q16 4Q16 1Q17

Sales ($B) $5.1 $5.4 $5.5

Adj. EBIT1 ($MM) $522 $498 $431

Adj. Operating EPS2 $0.80 $0.73 $0.60

Operating EPS impact of Ilim F/X3 – IP Share

$0.03 $0.01 $0.06

Adj. EBITDA1 ($MM) $806 $826 $776

Adj. EBITDA Margin1 15.8% 15.4% 14.1%

Free Cash Flow4 ($MM) $311 $467 $259

1 From continuing operations before special items and non-operating pension expense2 Adjusted operating EPS based on Adjusted Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and non-operating

pension expense)3 Represents F/X impact including that related to Ilim JV USD-denominated net debt (balance of ~$0.8B at end of 1Q17)4 See slide #21 for a reconciliation of cash provided by operations to free cash flow

6

806 826 776

1Q16 4Q16 1Q17

Adj. EBITDA1

($MM)


Pensacola Recovery | Digester Event Summary

7

• Adjustments to maintenance outage schedule

• Orders redirected to other mills

• Ability to use spare digester dome from Riegelwood mill

System Efforts to Mitigate Impact

• Remediation teams began cleaning common areas within 24 hours

of the incident

• Assessment and cleanup of impacted residences initiated within 48 hours

• Established information line, conducted door-to-door visits, held open house

Community Outreach

• Naturally produced pulping gases combined with pressurized air, triggered

an event never before experienced in IP

• Issued an alert to all IP mills to prevent recurrence

• Shared findings with industry globally

Findings

Jan 22, 2017

Digester Incident

No Injuries

Reported

Mill Down

Jan 23, 2017

Unified Command in

place - Initiated clean

up efforts Investigation

Mar 17, 2017

Spare Digester

Dome Delivered

from Riegelwood

Feb 3, 2017

Fluff Line

Start Up

April 3, 2017

Containerboard

Start Up

Costs & Insurance Recovery• Total costs estimated to be ~$80MM, including $16MM of capex

• Unfavorable 1Q17 earnings impact of $46MM before insurance and mitigation

• Insurance recovery of $12MM booked for 1Q17

• Bottom line impact for 1Q17 mitigated by outage moves and other cost-saving measures


.73

.60

(.04)(.04)

(.09)

(.03) (.07)

.09.01

.01.03

4Q16 Price / Mix Volume Operations& Costs

MaintenanceOutages

Input Costs Corporate/Other

Ilim JV Outages All Other 1Q17

1Q17 vs. 4Q16 Adj. Operating EPS

8

Adjusted operating EPS based on Adjusted Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and non-operating

pension expense)

Pulp

Acquisition


379360

(10) (2) (34)

(43)

70


MaintenanceOutages

Input Costs 1Q17

Industrial Packaging | 1Q17 vs. 4Q16 Adj. EBIT1

9

$ M

illio

n

1 Segment adjusted operating profit before special items


N.A. Industrial Packaging | Update on IP Pricing Activity

10

October 2016 price increase fully implemented

Box prices back to 4Q15 levels, but margins remain lower due to

higher input costs

2Q17 average OCC cost forecast similar to 1Q17 levels

Export containerboard pricing continues to improve

March 2017 price increase implementation underway

1 IP data

95

96

97

98

99

100

101

102

103

0

20

40

60

80

100

120

140

160

4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17

Bo

xO

CC

Indexed to 4TH Quarter 20151

OCC Delivered Cost Box Pricing


Global Cellulose Fibers | 1Q17 vs. 4Q16 Adj. EBIT1

11


(32)

(51)

(1)(2) (1)

(41)

7

3

16


MaintenanceOutages

Input Costs Outages All Other 1Q17

Pulp

Acquisition


Global Cellulose Fibers | Integration Synergies Update

12

Synergy Category

Description

1Q17

Actual

($MM)

1Q17

Run Rate

Annualized

($MM)

Full

Synergy

Target

($MM)

SG&A / Other Eliminate duplication $7.0 $28 $45

Commercial Mix

Opportunities

Customer and segment

optimization

High value product growth

Leverage innovation

$3.5 $14 $40

Manufacturing, Supply Chain,

& Sourcing

Grade / machine mix

optimization

Logistics optimization

Efficiency improvements

(Waste, Freight)

Purchasing opportunities

$3.5 $14 $90

Total $14 $56 $175


121

100

(16)

(19)(8)21 1


MaintenanceOutages

Input Costs 1Q17

Printing Papers | 1Q17 vs. 4Q16 Adj. EBIT1

13

$ M

illio

n



41

33

(5)

(11) (3)11


MaintenanceOutages

Input Costs 1Q17

Consumer Packaging | 1Q17 vs. 4Q16 Adj. EBIT1

14

$ M

illio

n


0


Consumer Packaging | SBS Industry Fundamentals

15

Source: AF&PA

92.4%

98.8%

102.2%

84%

86%

88%

90%

92%

94%

96%

98%

100%

102%

104%

Monthly Operating Rates2016- 2017 YTD

U.S. SBS Industry - 1Q17

Backlogs +28% Y/Y

Shipments +4.5% Y/Y

Mill Inventory Flat Y/Y

Trade Flows

Export and

Imports Up

Modestly Y/Y

Jan -17Jan -16 Jul -16

+28% YoY

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

550,000

Weekly Unmade Orders2016 - 2017 YTD


Ilim Joint Venture | 1Q17 vs. 4Q16

$ Million 1Q16 4Q16 1Q17

Sales Volume (thousand tons)

821 987 748

Sales $441 $539 $449

EBITDA $208 $194 $191

F/X (Impact of USD Net Debt)1 $28 $14 $58

Adj. Operational EBITDA2 $180 $180 $133

IP Equity Earnings (Loss)3 $62 $45 $50

Seasonally weaker sales volume and higher input costs partially offset by higher

pulp prices

F/X gain on USD denominated net debt driven by ruble strengthening

Seasonally stronger volume expected in 2Q17, partially offset by heavy outages;

non-repeat of 1Q17 F/X gain

16

Ilim JV results are on U.S. GAAP basis 1 Represents F/X impact including that related to Ilim JV USD-denominated net debt (balance of ~$0.8B at end of 1Q17); Ilim Group’s functional currency is the

Ruble (RUB); Non-functional-denominated currency balances are measured monthly using the month-end exchange rate2 Before F/X impact including USD-denominated net debt3 IP Equity Earnings (Loss) for 1Q16, 4Q16 and 1Q17 include after-tax F/X gains (primarily on USD-denominated net debt) of $11MM, $6MM and $23MM, respectively


North America EMEA & Russia Brazil

Price / Mix

Packaging Implementation Stable Stable

Cellulose Fibers Implementation

Paper Stable Increasing Increasing

Volume

Packaging Seasonal Increase Stable Stable

Cellulose Fibers Stable

Paper Stable Stable Stable

Operations & Other

Packaging Pensacola Costs Stable Stable

Cellulose Fibers Non-repeats

Paper Stable Stable Stable

Mill Maintenance Outages

Packaging Increase $63MM Increase $3MM Decrease $2MM

Cellulose Fibers Decrease $5MM

Papers Increase $13MM Increase $7MM Increase $3MM

Inputs & FreightPackaging Stable Stable Stable

Cellulose Fibers Stable

Printing Papers Stable Stable Stable

Other Items

Corporate expense, ~$15MM in 2Q17

Interest expense, in line with full-year outlook of ~$575MM-$600MM

Tax rate, in line with full-year outlook of ~33%

Ilim JV, forecasting Equity Earnings of ~$40MM

Second Quarter Outlook | Changes from 1Q17

17


EMEA – Eurozone

Containerboard and Box

18

4Q16 1Q17 2Q17 3Q17 4Q17

NBSK, SBSK

NBSK, SBSK, Fluff

NBSK, SBSK, Fluff

NBSK, SBSK, Fluff

Fluff pulp

N.A.

Industrial

Packaging

Global

Cellulose

Fibers

Printing

Papers

Brazil Domestic

N.A.

Consumer

Packaging

Jan RISI Pub: $15-$20/ton

Feb RISI Pub: $20-$25/ton

Mar RISI Pub: $20-$30/ton

Effective May 1: $40/ton

Effective March 1: 10.9%

CBD and Box

EMEA – Eurozone & Poland

Effective March 1: 5.0%

Latam ExportEffective May 1: 7.0%

SBS

April RISI Partial Pub ($20 of announced $50)

Nov RISI Pub: $40/ton April RISI Pub: $50/ton

Global Cellulose Cumulative Run Rate

(announced + published)

• NBSK +$90

• SBSK +$100

• Fluff +$115

Varies by Region

Export Containerboard

Effective May 15: 5.0%

Legend:

Announced

Effective April 1: $20-$30/ton

IP Key Pricing Activity | Setting the Stage for Strong Second Half


First half initiatives set stage for strong second half with continued momentum

Implementation of recent price announcements / margin improvement

Operational excellence and cost-savings efforts

Significantly lower maintenance outage expenses in second half

GCF integration and synergies

Madrid Mill conversion and start up

Allocate capital to create value with a near-term focus on debt reduction

Remain confident in upside to full year 10%+ YoY EBITDA growth

Key Takeaways & Outlook

19


AppendixInvestor Relations Contacts

Jay Royalty 901-419-1731

Michele Vargas 901-419-7287

Media Contact

Tom Ryan 901-419-4333

20



Cash Provided by Operations $620 $912 $633

Cash Invested in Capital Projects ($309) ($445) ($374)

Cash Contribution to Pension Plan - - -

Free Cash Flow $311 $467 $259

Free Cash Flow

21


Maintenance Outages Expenses | 2017 Forecast

22

$ Million 1Q17A 2Q17F 3Q17F 4Q17F 2017F

Industrial Packaging $70 $103 $47 $32 $252

North America 68 103 47 32 250

Brazil 2 0 0 0 2

Global Cellulose Fibers $50 $45 $8 $11 $114

Printing Papers $23 $46 $2 $13 $84


Europe 0 7 0 0 7

Brazil 0 3 0 2 5

India 0 0 1 0 1

Consumer Packaging $0 $31 $0 $4 $35


Europe 0 3 0 0 3

Total Impact $143 $225 $57 $60 $485


IP North American Downtime

23

140 146

72 92141 125

86117 93

78

230

212

85107 41

35

Maintenance Economic

18 1221

0 0 10 0

13

4 29

31

1513

29

0

30

1125

010

243

18 15 124 29

18 0

77

131

Containerboard

Uncoated Papers

Cellulose Fibers

Th

ou

sa

nd

To

ns

Th

ou

sa

nd

To

ns

Th

ou

sa

nd

To

ns

Th

ou

sa

nd

To

ns

150

Coated Paperboard

201

31

16

322

46

353

210193

158

13

55128


Special Items Pre-Tax ($ Million) 1Q16 4Q16 1Q17

Industrial Packaging

Holmen Acquisition Bargain Purchase Gain $6

Turkey Facility Closure ($7)

Impairment of Asia Box & Restructuring ($37)

Other ($1)

Global Cellulose Fibers

Pulp Business Inventory Step-up Amortization

($19) ($14)

Pulp Business Acquisition ($19) ($4)

Other ($1)

Consumer Pkg. Riegelwood Repurposing ($9)

Corporate Sale of Arizona Chemical Investment $8

Total Special Items Before Tax ($38) ($45) ($14)

Special Items Before Tax | Continuing Operations

24


Special Items Net of Taxes

1Q17

$ Million EPS

Earnings Before Special Items $249 $0.60

Special Items Net of Taxes:

Tax Expense – International Investment Restructuring ($15)

Pulp Business Inventory Step-up Amortization ($8)

Pulp Business Acquisition ($2)

Holmen Acquisition Bargain Purchase Gain $6

Other ($2)

Total Special Items Net of Taxes ($21) ($0.05)

Non-Operating Pension Expense ($19) ($0.05)

Net Earnings $209 $0.50

25


Adj. Operating Profits by Industry Segment | Continuing Operations

26


Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings $317 $280 $244

Interest Expense, Net $123 $136 $142

Noncontrolling Interest / Equity Earnings Adjustment - - -

Corporate Items, Net $21 $11 $11

Special Items, Net $38 $45 $14

Non-Operating Pension Expense $44 $37 $31

Adj. Operating Profit Before Special Items $543 $509 $442

Industrial Packaging1 $433 $379 $360

Global Cellulose Fibers1,2 ($50) ($32) ($51)

Printing Papers1 $135 $121 $100

Consumer Packaging1 $25 $41 $33

Total Adj. Industry Segment Operating Profit1,2 $543 $509 $442

Equity Earnings (Loss), net of taxes – Ilim $62 $45 $50

1 Excludes special items (Non-GAAP)2 Earnings from newly acquired pulp business are reflected beginning December 1, 2016


Geographic Business Segment Operating Results | Quarterly

27

$ MillionSales D & A Adj. Operating Profit1

1Q16 4Q16 1Q17 1Q17 1Q16 4Q16 1Q17

Industrial Packaging

North America $2,990 $3,052 $3,155 $170 $438 $384 $362

Europe $294 $325 $317 $8 $7 $9 $8

Brazil $42 $77 $59 $5 ($8) ($14) ($10)

Global Cellulose Fibers2

Global Cellulose Fibers $212 $379 $564 $59 ($50) ($32) ($51)

Printing Papers

North America $481 $465 $468 $19 $61 $43 $33

Europe $258 $284 $274 $10 $40 $28 $29

Brazil $190 $260 $214 $26 $35 $50 $39

India $43 $47 $48 $5 ($1) $0 ($1)

Consumer Packaging

North America $418 $386 $388 $25 ($1) $21 $14

Europe $77 $78 $78 $2 $26 $20 $19

Does not reflect total company sales1 Excludes special items (Non-GAAP)2 Earnings from newly acquired pulp business are reflected beginning December 1, 2016


2017 Operating Earnings

28

Pre-Tax$MM

Tax$MM

Non-controlling

Interest$MM

EquityEarnings

Net Income$MM

Average Shares

MMDiluted EPS1

Net Earnings from Continuing Operations

1Q17 $244 ($83) - $48 $209 416 $0.50

Net Special Items

1Q17 $14 $7 - - $21 416 $0.05

Non-Operating Pension Expense

1Q17 $31 ($12) - - $19 416 $0.05

Adj. Operating Earnings

1Q17 $289 ($88) - $48 $249 416 $0.60

1 A reconciliation to GAAP EPS is available at www.internationalpaper.com under the Performance tab, Investors section


Adj. Operating EPS

29

2006 as originally reported

2007-2011 adjusted for elimination of the Ilim JV reporting lag

2006-2010 Net Earnings from continuing operations and before special items; 2010 onward reflects Operating Earnings

xpedx is reflected as a Discontinued Operation from 2010 onward

.12

.35

.40

.47 .45

.52

.57

.73

.45.49

.41

.15

.07

.27

.38

.22

.05

.44

.85

.72.76 .77 .78

.67

.58

.49

.77

.66.64

.61

1.01

.81

.60

.93.95

.53

.84

.97 .97

.87

.80

.92 .91

.73

.60.42

.08

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

17

2006 2007 20102008

Impact of Mineral

Rights Gain

2009

.83

2011

.93Final Land Sale

2012 2013 2014 2015 2016


.80

.60

(.04) (.08) (.14)

(.02)(.03)

(.06)

.03 .09

.05


MaintenanceOutages

Input Costs Corporate& Other Items

Ilim JV Outages All Other 1Q17

1Q17 vs. 1Q16 Adj. Operating EPS

30

Adjusted operating EPS based on Adjusted Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and non-operating

pension expense)

Pulp

Acquisition


433

360

(45)

(83)34

18

3


MaintenanceOutages

Input Costs 1Q17

Industrial Packaging | 1Q17 vs. 1Q16 Adj. EBIT1

31

$ M

illio

n



1Q17 vs. 4Q16 1Q17 vs. 1Q16

Business VolumePrice / Mix

per TonVolume

Price / Mixper Ton

N.A. Container1 (9.0%) $22 (0.7%) $11

European Container (2%) (€4) 1% (€6)

Average IP volume and price realization (includes the impact of mix across all segments)1 On a per day FBA basis

Industrial Packaging | Volume and Pricing Trends

32


N.A. Industrial Packaging Relative Adj. EBITDA Margins

33

21.8%20.4%

17.5%

19.7% 20.6%

15.8%

18.7%

20.6%

15.9%

IP PCA WestRock

1Q16 4Q16 1Q17

1Trailing Twelve Months

IP Adjusted EBITDA margins based on North American Industrial Packaging operating profit before special items

Excludes the Recycling Business and revenue from trade volumes

Competitor Adjusted EBITDA margin estimates obtained from public filings and IP analysis

TTM1

20.7%

17.0%

TTM1

21.1%

TTM1


Global Cellulose Fibers | 1Q17 vs. 1Q16 Adj. EBIT1

34


(50) (51)

(17)

(18)

(1)

(38)42

31


MaintenanceOutages

Input Costs Outages All Other 1Q17

0

Pulp

Acquisition


Global Cellulose Fibers | Volume and Pricing Trends

35

1Q17 vs. 4Q161 1Q17 vs. 1Q161

Business VolumePrice / Mixper Tonne

VolumePrice / Mixper Tonne

Pulp (metric ton) (1%) ($27) 6% ($28)

Average volume and price realization (includes the impact of mix across all grades and destinations)1Proforma basis- Combined Global Cellulose Fibers


135

100

(26)

(1) (7)

(6)

5


MaintenanceOutages

Input Costs 1Q17

Printing Papers | 1Q17 vs. 1Q16 Adj. EBIT1

36

$ M

illio

n



1Q17 vs. 4Q16 1Q17 vs. 1Q16

Business VolumePrice / Mix

per TonVolume

Price / Mixper Ton

N.A. Printing Papers 4% ($32) 3% ($55)

European Papers1 (8%) (€3) 7% (€36)

Average IP volume and price realization (includes the impact of mix across all grades)1 Excludes Russia

Printing Papers | Volume and Pricing Trends

37


N.A. Printing Papers Relative Adj. EBITDA Margins

38

16.8%17.2%

12.9%13.5%

18.4%

15.0%

11.1%

15.6%

IP PCA Domtar

1Q16 4Q16 1Q17

UFS

Reports

4/27

1Trailing Twelve Months

IP Adjusted EBITDA margins based on operating profit from continuing operations before special items

Competitor Adjusted EBITDA margin estimates obtained from public filings and IP analysis

TTM1

15.4%16.7%


Printing Papers | IP Brazil

39


Sales $190 $260 $214

Adj. Earnings $35 $50 $39

Adj. EBITDA Margin 29% 29% 30%

1Q17 vs. 4Q16 1Q17 vs. 1Q16

Uncoated Freesheet VolumePrice / Mix

per TonVolume

Price / Mixper Ton

Domestic (BRL) (21%) (R$33) (11%) R$345

Export (USD) (11%) ($21) 18% ($42)

Segment adjusted operating profit before special items

IP Brazil results are reported in the Printing Papers segment

Average IP Brazil price realization (includes the impact of mix across all grades)


25

33

(11)

(2)1

18

2


MaintenanceOutages

Input Costs 1Q17

Consumer Packaging | 1Q17 vs. 1Q16 Adj. EBIT1

40

$ M

illio

n



Average IP price realization (includes the impact of mix across all grades)1 All periods exclude Carolina brand coated bristols sales

1Q17 vs. 4Q16 1Q17 vs. 1Q16

VolumePrice / Mix

per TonVolume

Price / Mixper Ton

N.A. Coated Paperboard1 6% ($18) (2%) ($42)

Revenue Revenue

Foodservice (8%) (2%)

Consumer Packaging | Volume and Pricing Trends

41


Ilim Joint Venture | Full Year Financials

42

2013 2014 2015 2016

Sales Volume (Million tons) 2.7 3.2 3.3 3.5

Sales ($B) 1.9 2.1 1.9 1.9

Debt ($B) 1.5 1.4 1.2 1.5

Adj. Operating EBITDA ($MM) 203 459 694 680

F/X Gain (Loss)1 ($MM) (80) (674) (188) 63

EBITDA ($MM) 123 (215) 506 743

Depreciation ($MM) 176 188 128 121

EBIT ($MM) (53) (403) 378 622

Interest Expense ($MM) 39 69 52 81

Net Income / (Loss) ($MM) (72) (359) 237 385

IP Equity Earnings / (Loss) ($MM) (46) (194) 131 199

Dividends (to IP) ($MM) 0 56 35 60

Ilim JV results are US GAAP basis 1 Represents F/X impact including that related to Ilim JV USD-denominated net debt (balance of ~$0.6B at year end 2016)


Ilim Joint Venture | Volume and Pricing Trends

43

1Q17 vs. 4Q16 1Q17 vs. 1Q16

Business VolumePrice / Mixper Tonne

VolumePrice / Mixper Tonne

Pulp (metric ton) (24%) $22 (7%) $17

Average Ilim JV (100%) volume and price realization (includes the impact of mix across all grades and destinations)


Total Cash Cost Components | 1Q17 YTD

44

North American mills only (excludes newly acquired pulp business)

Fiber34%

Materials16%

Freight12%

Labor13%

Energy8%

Overhead10%

Chemicals7%


($31)

($11) ($10)

($3)

Fiber Energy Chemicals Freight

North America Outside North America

($43)

($1)

($8)

($3)

IndustrialPackaging

GlobalCellulose

Fibers

PrintingPapers

ConsumerPackaging

Energy Wood Chemicals Freight OCC

By Business By Input Type

Input costs ($MM) for continuing businesses

Global Input Costs vs. 4Q16 | $55MM Unfavorable, or $0.09/Share

45

OCC

Wood


($41)

($32)

($6) ($9)

Fiber Energy Chemicals Freight

North America Outside North America

($83)

($1)

($6)

$2

IndustrialPackaging

GlobalCellulose

Fibers

PrintingPapers

ConsumerPackaging

Energy Wood Chemicals Freight OCC

By Business By Input Type

Global Input Costs vs. 1Q16 | $88MM Unfavorable, or $0.14/Share

46

OCC

Wood

Input costs ($MM) for continuing businesses


90

95

100

105

110

115

120

125

130

U.S. Mill Wood Delivered Cost Trend | 1Q17 Average Cost Down 1% vs. 4Q16

47

IP data, cost Indexed to January 2007 values

2008 2009 2010 2011 2012 2013 2014 2015 2016


40

60

80

100

120

140

160

180

200

220


U.S. OCC Delivered Cost Trend | 1Q17 Average Cost Up 25% vs. 4Q16

48

2008 2009 2010 2011 2012 2013 2014 2015 2016


U.S. Natural Gas Cost Trend | 1Q17 Average Cost Up 11% vs. 4Q16

49

0

50

100

150

200

250


NYMEX Natural Gas closing prices

2008 2009 2010 2011 2012 2013 2014 2015 2016


0

50

100

150

200

250

300

U.S. Fuel Oil Cost Trend | 1Q17 Average Cost Up 23% vs. 4Q16

50


WTI Crude prices

2008 2009 2010 2011 2012 2013 2014 2015 2016


75

100

125

150

175

200

U.S. Chemical Composite Cost Trend | 1Q17 Average Cost Flat vs. 4Q16

51


Delivered cost to U.S. facilities: includes Caustic Soda, Sodium Chlorate, Starch and Sulfuric Acid 2007 - 2008 excludes WY PKG

2008 2009 2010 2011 2012 2013 2014 2015 2016


2017 Global Consumption | Annual Purchase Estimates for Key Inputs

52

CommodityNorth

AmericaNon – North

America

Energy

Natural Gas (MMBTUs) 85,000,000 11,000,000

Fuel Oil (Barrels) 370,000 400,000

Coal (Tons) 130,000 600,000

FiberWood (Tons) 60,000,000 8,000,000

Old Corrugated Containers / DLK (Tons) 4,800,000 400,000

Chemicals

Caustic Soda (Tons) 400,000 70,000

Starch (Tons) 390,000 120,000

Sodium Chlorate (Tons) 220,000 50,000

LD Polyethylene (Tons) 40,000 -

Latex (Tons) 10,000 6,000

Includes purchase estimates for newly acquired pulp business

first quarter 2017 earnings | april 27, 2017...earnings presentation | first quarter 2017 emea...

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