INTERNATIONAL PAPER CO NEW

The Company currently operates in two segments: Industrial Packaging and Global Cellulose Fibers. On September 18, 2023, the Company completed the sale of its Ilim equity investment and, as a result, all historical results of the Ilim investment are presented as Discontinued Operations, net of taxes and our equity investment is no longer a separate reportable segment.

The following tables present net sales and business segment operating profit (loss), which is the Company's measure of segment profitability. Business segment operating profit (loss) is a measure reported to our management for purposes of making decisions about allocating resources to our business segments and assessing the performance of our business segments and is presented in our financial statement footnotes in accordance with ASC 280 - "Segment Reporting". For additional information regarding business segment operating profit (loss), including a description of the manner in which business segment operating profit (loss) is calculated, see Note 19 - Business Segment Information of the Condensed Notes to the Consolidated Financial Statements.

Industrial Packaging

Industrial Packaging net sales for the third quarter of 2024 were flat compared with the second quarter of 2024 and 4% higher compared with the third quarter of 2023. Business segment operating profit was 32% lower in the third quarter of 2024 compared with the second quarter of 2024 and 39% lower compared with the third quarter of 2023.

(a)Includes intra-segment sales of $36 million and $20 million for the three months ended September 30, 2024 and 2023, respectively; $25 million and $17 million for the three months ended June 30, 2024 and 2023, respectively; and $87 million and $69 million for the nine months ended September 30, 2024 and 2023, respectively.

North American Industrial Packaging sales in the third quarter of 2024 were higher compared to the second quarter of 2024 driven by higher average sales prices reflecting prior index movements and the benefits of our box go-to-market strategy, partially offset by seasonally lower volumes and the impact of one less shipping day in the third quarter of 2024. Total maintenance and economic downtime was about 18,000 short tons lower in the third quarter of 2024 compared with the second quarter of 2024, as higher maintenance downtime was more than offset by lower economic downtime. Operating costs were higher driven by reliability incidents and spending, seasonally higher labor, employee benefit costs and weather. Planned maintenance downtime costs were higher in the third quarter of 2024 compared with the second quarter of 2024. Input costs were higher driven by higher energy and wood costs. Business segment operating profit (loss) benefited from the receipt of a $20 million insurance reimbursement in the third quarter of 2024 related to the Ixtac, Mexico fire in the first quarter of 2024.

Compared with the third quarter of 2023, sales in the third quarter of 2024 were higher reflecting the impact of our box go-to-market strategy and lower economic downtime partially offset by an unfavorable geographic mix. Total maintenance and economic downtime was about 294,000 short tons lower in the third quarter of 2024, primarily due to lower economic downtime. Economic downtime was favorably impacted by the mill strategic actions taken in the fourth quarter of 2023. Operating costs increased, driven by increased costs on goods and services, reliability incidents and spending and employee benefit costs. Planned maintenance downtime costs were higher in the third quarter of 2024 compared with the third quarter of 2023. Input costs were higher driven by recovered fiber partially offset by lower energy, wood and freight costs.

Entering the fourth quarter of 2024, sales volumes are expected to be lower compared to the third quarter of 2024. There are two less shipping days in the fourth quarter of 2024. The lower volumes are expected to be offset by prior index movements. Operating costs are expected to be lower. Planned maintenance downtime costs are also expected to be lower in the fourth quarter of 2024 compared with the third quarter of 2024. Input costs are expected to be lower driven by recovered fiber and wood costs. The fourth quarter of 2024 is expected to include $15 million of accelerated depreciation associated with the previously announced box plant closures.

EMEA Industrial Packaging sales in the third quarter of 2024 were seasonally lower compared with the second quarter of 2024. Operating costs were lower in both the mill and box system. The second quarter of 2024 included the impact of a warehouse fire in Morocco. Planned maintenance downtime costs were lower in the third quarter of 2024 compared with the second quarter of 2024. Input costs were higher driven by higher fiber costs.

Compared with the third quarter of 2023, sales in the third quarter of 2024 were higher reflecting increased volumes in Morocco, in addition to a favorable product mix. Operating costs were higher, driven by higher administrative spend. There were no planned maintenance outages in the third quarter of 2024 or the third quarter of 2023. Input costs were higher, driven by higher fiber and energy costs.

Looking ahead to the fourth quarter of 2024, sales are expected to be seasonally higher. Operating costs are expected to be higher. Input costs are expected to be lower, primarily driven by fiber and energy costs. Planned maintenance downtime costs are expected to be higher in the fourth quarter of 2024.

Global Cellulose Fibers net sales in the third quarter of 2024 were 1% lower compared with the second quarter of 2024 and 2% lower than in the third quarter of 2023. Business Segment operating profit was $9 million higher in the third quarter of 2024 compared with the second quarter of 2024 and was $13 million higher compared with the third quarter of 2023.

Sales were lower, reflecting lower sales volumes for commodity pulp partially offset by higher sales volumes for fluff pulp and higher average sales prices in the third quarter of 2024 compared with the second quarter of 2024. Total maintenance and economic downtime was about 9,000 short tons lower in the third quarter of 2024 compared with the second quarter of 2024 primarily driven by maintenance downtime. Operating costs were higher, reflecting mill reliability incidents, employee benefit costs and the timing of spending. Planned maintenance downtime costs in the third quarter of 2024 were lower compared with the second quarter of 2024. Input costs were stable as lower energy and chemical costs were offset by higher wood costs.

Compared with the third quarter of 2023, sales in the third quarter of 2024 were lower, as higher average sales prices and higher fluff volumes were more than offset by lower commodity volumes. Total maintenance and economic downtime was about 136,000 short tons lower in the third quarter of 2024, primarily due to economic downtime. Economic downtime was favorably impacted by the mill strategic actions taken in the second half of 2023. Operating costs were higher, driven by mill reliability incidents and employee benefit costs. Planned maintenance downtime costs in the third quarter of 2024 were lower compared with the third quarter of 2023. Input costs were lower primarily for energy and chemicals.

Entering the fourth quarter of 2024, sales are expected to be lower. Planned maintenance downtime costs in the fourth quarter of 2024 are expected to be higher compared with the third quarter of 2024. Operating costs are expected to be lower. Input costs are expected to be stable. The fourth quarter of 2024 is expected to include $220 million of accelerated depreciation associated with the previously announced closure of the Georgetown, South Carolina mill.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operations totaled $1.3 billion for both the first nine months of 2024 and 2023. Cash provided by working capital components (accounts receivable, contract assets and inventory less accounts payable and accrued liabilities, interest payable and other) totaled $216 million for the nine months ended September 30, 2024 compared with cash used by working capital components of $72 million for the nine months ended September 30, 2023. The change in cash provided by operations in the first nine months of 2024 compared to the comparable 2023 nine-month period was primarily due to higher employee incentive compensation accruals and the timing of mill outage spending on accounts payable, partially offset by lower accounts receivable cash receipts due to the timing of sales.

Investments in capital projects totaled $661 million in the first nine months of 2024, compared to $836 million in the first nine months of 2023. Full-year 2024 capital spending is currently expected to be approximately $800 million to $1.0 billion, or 62% to 77% of depreciation and amortization.

Financing activities for the first nine months of 2024 included a $33 million net decrease in debt versus an $83 million net increase in debt during the comparable 2023 nine-month period.

See Note 16 - Debt of the Condensed Notes to the Consolidated Financial Statements for a discussion of various debt-related actions taken by the Company during the nine months ended September 30, 2024.

There were no early debt reductions for the three months or nine months ended September 30, 2024 and 2023, respectively.

At September 30, 2024, contractual obligations for future payments of debt maturities (including finance lease liabilities disclosed in Note 10 - Leases and excluding the timber monetization structure disclosed in Note 15 - Variable Interest Entities)

by calendar year were as follows: $109 million in 2024; $191 million in 2025; $144 million in 2026; $333 million in 2027; $672 million in 2028 and $4.1 billion thereafter.

Maintaining an investment-grade credit rating is an important element of International Paper’s financing strategy. At September 30, 2024, the Company held long-term credit ratings of BBB (stable outlook) and Baa2 (stable outlook) by S&P and Moody’s, respectively. In addition, the Company held short-term credit ratings of A2 and P2 by S&P and Moody's, respectively, for borrowings under the Company's commercial paper program.

At September 30, 2024, International Paper’s credit agreements totaled $1.9 billion, which is comprised of the $1.4 billion contractually committed bank credit agreement and up to $500 million under the receivables securitization program. In June 2023, the Company amended and restated its credit agreement to, among other things (i) reduce the size of the contractually committed bank facility from $1.5 billion to $1.4 billion, (ii) extend the maturity date from June 2026 to June 2028, and (iii) replace the LIBOR-based rate with a SOFR-based rate. Management believes that the Company's credit agreements are adequate to cover expected operating cash flow variability during the current economic cycle. The credit agreements generally provide for interest rates at a floating rate index plus a pre-determined margin dependent upon International Paper’s credit rating. At September 30, 2024, the Company had no borrowings outstanding under the $1.4 billion credit agreement or the $500 million receivables securitization program. The Company’s credit agreements are not subject to any restrictive covenants other than the financial covenants as disclosed in Note 16 - Debt, and the borrowings under the receivables securitization program being limited by eligible receivables. The Company was in compliance with all its debt covenants at September 30, 2024, and was well below the thresholds stipulated under the covenants as defined in the credit agreements. The financial covenants do not restrict any borrowings under the credit agreements.

In addition to the $1.4 billion capacity under the Company's credit agreements, International Paper has a commercial paper program with a borrowing capacity of $1.0 billion supported by its $1.4 billion credit agreement. Under the terms of the program, individual maturities on borrowings may vary, but not exceed one year from the date of issue. Interest bearing notes may be issued either as fixed or floating rate notes. As of September 30, 2024, the Company had no outstanding borrowings under the commercial paper program.

During the first quarter of 2024, the Company had debt reductions of $3 million related to decreases in the amount of capital leases.

During the second quarter of 2024, the Company had debt reductions of $5 million related to decreases in the amount of capital leases.

During the third quarter of 2024, the Company had debt reductions of $25 million which included the repayment of approximately $22 million EDB with an interest rate of 1.90% that matured on August 1, 2024, and $3 million related to decreases in the amount of capital leases.

International Paper expects to meet projected capital expenditures, service existing debt, meet working capital and dividend payments and make common stock and/or debt repurchases for the next 12 months and for the foreseeable future thereafter with current cash balances and cash from operations, supplemented as required by its existing credit facilities. The Company will continue to rely on debt and capital markets for the majority of any necessary long-term funding not provided by operating cash flows. Funding decisions will be guided by our capital structure planning objectives. The primary goals of the Company’s capital structure planning are to maximize financial flexibility and maintain appropriate levels of liquidity to meet our needs while managing balance sheet debt and interest expense. We have repurchased, and may continue to repurchase, our common stock (under our existing share repurchase program) and debt (including in open market purchases) to the extent consistent with this capital structure planning, and subject to prevailing market conditions, our liquidity requirements, applicable securities laws requirements, and other factors. The majority of International Paper’s debt is accessed through global public capital markets where we have a wide base of investors.

During the first nine months of 2024, International Paper used 2.0 million shares of treasury stock for various incentive plans. International Paper also acquired 0.6 million shares of treasury stock, including restricted stock tax withholdings during the first three months of 2024. Repurchases of common stock and payments of restricted stock withholding taxes totaled $22 million during this period. Our current share repurchase program approved by our Board of Directors ("Board") on October 11, 2022, which does not have an expiration date, has approximately $2.96 billion aggregate amount of shares of common stock remaining authorized for purchase as of September 30, 2024. During the three months ended September 30, 2024, no shares of common stock were repurchased under our share repurchase program.

During the first nine months of 2023, International Paper used approximately 1.6 million shares of treasury stock for various incentive plans. International Paper also acquired 5.9 million shares of treasury stock, including restricted stock tax withholding during the first three months of 2023. Repurchases of common stock and payments of restricted stock withholding taxes totaled $218 million, including $197 million related to shares repurchased under the Company's repurchase program during this period.

Cash dividend payments related to common stock totaled $482 million and $482 million for the first nine months of 2024 and 2023, respectively. Dividends were $1.3875 per share for the first nine months of 2024 and 2023.

Our pension plan is currently fully funded and we do not anticipate any required cash contributions for the next 12 months.

Variable Interest Entities

Information concerning variable interest entities is set forth in Note 15 in the Company's Annual Report. In connection with the 2006 International Paper installment sale of forestlands, we received $4.8 billion of installment notes. These installment notes were used by variable interest entities as collateral for borrowings from third-party lenders. These variable interest entities were restructured in 2015 when the installment notes and third-party loans were extended. The restructured variable interest entities held installment notes of $4.8 billion and third-party loans of $4.2 billion which both matured in August 2021. We settled the third-party loans at their maturity with the proceeds from the installment notes. This resulted in cash proceeds of approximately $630 million representing our equity in the variable interest entities. Maturity of the installment notes and termination of the monetization structure also resulted in a $72 million tax liability that was paid in the fourth quarter of 2021. On September 2, 2022, the Company and the Internal Revenue Service agreed to settle the previously disclosed timber monetization restructuring tax matter involving the 2015 Financing Entities. Under this agreement, the Company agreed to fully resolve the matter and pay $252 million in U.S. federal income taxes. As a result, interest was charged upon closing of the audit. The Company has paid $252 million in U.S. federal income taxes and $58 million in interest expense as a result of the settlement agreement. Of this amount, the Company paid $163 million in U.S. federal income taxes and $30 million in interest during the first quarter of 2023, with the Company fully satisfying the remaining payment terms of the settlement agreement regarding the 2015 Financing Entities timber monetization restructuring tax matter during the second quarter of 2023.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires International Paper to establish accounting policies and to make estimates that affect both the amounts and timing of the recording of assets, liabilities, revenues and expenses. Some of these estimates require judgments about matters that are inherently uncertain.

Accounting policies whose application may have a significant effect on the reported results of operations and financial position of International Paper, and that may require judgments by management that affect their application, include accounting for contingencies, impairment or disposal of long-lived assets, goodwill and other intangible assets, pensions and income taxes.

The Company has included in its Annual Report a discussion of these critical accounting policies, which are important to the portrayal of the Company’s financial condition and results of operations and may require management’s judgments. The Company has not made any changes in these critical accounting policies during the first nine months of 2024.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q that are not historical in nature may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements can be identified by the use of forward-looking or conditional words such as “expects,” “anticipates,” “believes,” “estimates,” “could,” “should,” “can,” “forecast,” “intend,” “look,” “may,” “will,” “remain,” “confident,” “commit” and “plan” or similar expressions. These statements are not guarantees of future performance and reflect management’s current views and speak only as to the dates the statements are made and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. All statements, other than statements of historical fact, are forward-looking statements, including, but not limited to, statements regarding anticipated financial results, economic conditions, industry trends, future prospects, and the execution and consummation of corporate transactions or contemplated acquisitions, including our proposed Business Combination with DS Smith Plc. Factors which could cause actual results to differ include but are not limited to: (i) our ability to consummate and achieve the benefits expected from, and other risks associated with, acquisitions, joint ventures, divestitures, spinoffs, capital investments and other corporate transactions, including, but not limited to, our proposed Business Combination with DS Smith Plc and our ability to integrate and implement our plans, forecasts, and other expectations with respect to the combined company; (ii) uncertainty as to whether or when the

Business Combination may be completed, if at all (iii) risks with respect to climate change and global, regional, and local weather conditions, as well as risks related to our targets and goals with respect to climate change and the emission of greenhouse gases and other environmental, social and governance matters, including our ability to meet such targets and goals; (iv) loss contingencies and pending, threatened or future litigation, including with respect to environmental related matters; (v) the level of our indebtedness, risks associated with our variable rate debt, and changes in interest rates (including the impact of current elevated interest rate levels and the potential for ongoing reductions in interest rates); (vi) the impact of global and domestic economic conditions and industry conditions, including with respect to current negative macroeconomic conditions, inflationary pressures and changes in the cost or availability of raw materials, energy sources and transportation sources, supply chain shortages and disruptions, competition we face, cyclicality and changes in consumer preferences, demand and pricing for our products, and conditions impacting the credit, capital and financial markets; (vii) risks arising from conducting business internationally, domestic and global geopolitical conditions, military conflict (including the Russia/Ukraine conflict, the conflict in the Middle East, the further expansion of such conflicts, and the geopolitical and economic consequences associated therewith), changes in currency exchange rates, trade protectionist policies and trade tensions, downgrades in our credit ratings, and/or the credit ratings of banks issuing certain letters of credit, issued by recognized credit rating organizations; (viii) the amount of our future pension funding obligations, and pension and healthcare costs; (ix) the costs of compliance, or the failure to comply with, existing and new environmental (including with respect to climate change and greenhouse gas emissions), tax, labor and employment, privacy, anti- bribery and anti-corruption, and other U.S. and non-U.S. governmental laws and regulations (including but not limited to those in the United Kingdom and European Union); (x) any material disruption at any of our manufacturing facilities or other adverse impact on our operations due to severe weather, natural disasters, climate change or other causes; (xi) our ability to realize expected benefits and cost savings associated with restructuring initiatives; (xii) cybersecurity and information technology risks, including as a result of security breaches and cybersecurity incidents; (xiii) our exposure to claims under our agreements with Sylvamo Corporation; (xiv) our failure to realize the anticipated benefits of the spin-off of Sylvamo Corporation and the qualification of such spin-off as a tax-free transaction for U.S. federal income tax purposes; (xv) risks associated with our review of strategic options for our Global Cellulose Fibers business; and (xvi) our ability to attract and retain qualified personnel. These and other factors that could cause or contribute to actual results differing materially from such forward-looking statements can be found in our press releases and reports filed with the U.S. Securities and Exchange Commission. In addition, other risks and uncertainties not presently known to the Company or that we currently believe to be immaterial could affect the accuracy of any forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.