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The call presented a balanced picture: clear, measurable operational and strategic progress (volume outperformance, productivity gains, targeted investments, EMEA cost saves, strategic acquisition, and a defined path to H2 improvement) but also material near-term headwinds (revised guidance, weather impacts, higher-than-expected transformation costs, freight/energy inflation, and temporary margin compression in EMEA). Management articulated specific remediation steps and expects a significant step-up in the second half, but near-term results and cash generation were pressured.
International Paper updated full‑year 2026 guidance to adjusted EBITDA of $2.35–$2.5 billion for Packaging Solutions North America and $900 million–$1.0 billion for Packaging Solutions EMEA, implying enterprise adjusted EBITDA of $3.2–$3.5 billion and free cash flow of roughly $300–$500 million. For Q2 the company sees Packaging Solutions North America adjusted EBITDA of about $380–$410 million and Packaging Solutions EMEA of about $150–$170 million; Q1 enterprise results included adjusted EBITDA of $677 million, adjusted EBIT of $188 million, margins of 11.3%, free cash flow of $94 million (including a $280 million tax refund), Packaging Solutions NA EBITDA of $477 million and EMEA EBITDA of $208 million. Operational and market metrics and drivers noted: North America box volumes +2.5% y/y on a per‑day basis vs. industry −0.3% (≈3% outperformance), Q2 NA volumes expected ≈+3% (industry flat) and full‑year outperformance of ≈2%, industry demand now ~flat y/y (versus prior flat to +1%), box productivity +7% since Q3‑2024, mills self‑generate >70% of energy in NA, investments ≈50% more per facility in 2025–2027 vs. the prior 3‑year average, NORPAC acquisition expected to deliver high‑teens returns, EMEA run‑rate cost savings increased ≈$40 million to >$200 million with 31 closures affecting >2,800 positions, and expected second‑half step‑ups: PS NA first‑half $900 million with a ~$650 million second‑half uplift (≈$300M price/volume/mix, ~$150M 80/20 cost‑outs, ~$150M outage timing benefits, ~$100M Riverdale conversion first‑half drag, offset by ~$50M macro headwind) and PS EMEA second‑half EBITDA of $540–$620 million (driven by ≈$110M margin/commercial recovery, ~$40M cost‑out and ~$50M energy normalization).
North American box volumes rose 2.5% year-over-year on a per-day basis in Q1 versus an industry decline of 0.3%, delivering roughly a 3% outperformance for the third consecutive quarter; Q2 NA volumes expected to be up ~3% with industry flat and full-year outperformance targeted at ~2%.
Box productivity improved 7% since Q3 2024 and capacity utilization in the mill system has meaningfully improved, supported by elevated capital investment and lighthouse operating practices.
More than 80 major investments across mills and box plants planned or underway (corrugators, converting equipment, specialty capabilities); company is investing ~50% more per facility in 2025–2027 versus the prior 3-year average to rebuild reliability and modernize assets.
Announced bolt-on acquisition of the NORPAC paper mill (West Coast) which includes three paper machines (two producing recycled lightweight containerboard); management expects post-integration returns in the high teens and meaningful freight/cost advantages on the West Coast.
EMEA run-rate cost savings increased from ~$160M to more than $200M since last quarter; 31 closures completed or in process and net reduction of >2,800 positions as part of footprint optimization.
Consolidated Q1 adjusted EBITDA of $677M (11.3% margin) and adjusted EBIT of $188M; generated $94M free cash flow in the quarter (including a one-time $280M tax refund) and received $1.1B from the sale of GCF which funded $660M of debt paydown.
Updated full-year targets: Packaging Solutions North America adjusted EBITDA $2.35B–$2.5B and EMEA $0.9B–$1.0B (enterprise $3.2B–$3.5B); management expects a $650M step-up from H1 to H2 for NA driven by pricing/volume/mix, 80/20 cost-outs (~$150M), and outage timing.
Good morning, and thank you for standing by. Welcome to International Paper's First Quarter 2026 Earnings Call. [Operator Instructions] It is now my pleasure to turn the call over to Mandi Gilliland, Senior Director of Investor Relations. Ma'am, the floor is yours.
Good morning, and good afternoon. Thank you for joining International Paper's First Quarter 2026 Earnings Call. Our speakers this morning are Andy Silvernail, Chairman and Chief Executive Officer; and Lance Loeffler, Senior Vice President and Chief Financial Officer. There is important information at the beginning of our presentation, including certain legal disclaimers. For example, during this call, we will make forward-looking statements that are subject to risks and uncertainties. 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. We will also present certain non-U.S.
GAAP financial information. A reconciliation of those figures to U.S. GAAP financial measures is available on our website. Our website also contains copies of the first quarter earnings press release and today's presentation slides. So now let me turn it over to Andy Silvernail.
Thanks, Mandi. Good morning, good afternoon, everyone. Let's begin on Slide 3. This quarter reinforced the importance of controlling the controllables in a dynamic operating environment. While inflationary pressures and weather-related disruptions created volatility, our focus remains squarel...