International Paper Company (IP) Earnings & Analysis

Latest quarter

International Paper reported Q3 FY2026 revenue of $6.2 billion, below the consensus of $6.3 billion. Adjusted earnings per share were $0.37, above the $0.30 consensus. Revenue fell −0.40% from a year earlier, when it was also $6.2 billion on a rounded basis.

The company reported a diluted loss per share of −$2.13, compared with −$2.09 a year earlier. Its filing attributed the quarter’s loss from continuing operations primarily to a $1.4 billion non-cash goodwill impairment in its EMEA packaging business.

The filing said North American sales declined from a year earlier as lower volumes outweighed higher box prices. EMEA sales also fell as paper and box volumes declined. International Paper reported an operating margin of 4.70%, compared with −2.91% a year earlier, and a gross margin of 31.2%, compared with 31.1%.

On the call, CFO Lance Loeffler said free cash flow was negative $267 million, reflecting maintenance payments, interest payments and an inventory build.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Andy Silvernail said North American box shipments declined approximately 2% year over year in the third quarter, one point better than the company’s estimate of industry demand. He cited disruption in West Coast fruit and vegetables and softness in protein markets. In response to questions, Silvernail said North American demand was generally stable sequentially, while Europe had seen a modest uptick in October amid greater volatility.

Silvernail said inflation was affecting both International Paper and its customers. Loeffler said North American price and mix were $141 million favorable sequentially as previously published price increases took effect faster than expected. On pricing execution, Silvernail said the company had secured faster uptake on non-contractual pricing and had focused on applying contractual terms.

Loeffler said EMEA’s third-quarter results improved sequentially but fell below expectations as demand remained soft and input costs rose. Higher paper costs pressured box margins, he said, while cost reductions and lower variable costs helped offset the pressure. In North America, he attributed the sequential earnings improvement partly to lower planned outage activity and the completion of the Riverdale machine conversion.

For the fourth quarter, Loeffler expects seasonal demand, continued price realization and the Riverdale ramp-up to support North American results, with higher diesel and recovered fiber costs offsetting some benefits. He also said inventory rebuilding had weighed on third-quarter cash flow and expects a working-capital swing back to positive in the fourth quarter.

Asked about investment, Silvernail said North American capital spending would remain elevated and that the range would generally be similar in 2027. On West Coast agriculture, he said the company had not aggregated the impact into a specific percentage. Silvernail also said International Paper is evaluating a potential sale of its EMEA business while continuing spinoff preparations; under a spinoff, it plans to retain approximately a 20% stake.

Guidance

Loeffler set International Paper’s full-year 2026 North American adjusted EBITDA outlook at $2.27 billion to $2.31 billion. He said higher inflation and weaker volume expectations had reduced the outlook, with the midpoint lowered by approximately $110 million since the second-quarter call.

Loeffler also said the company had stopped including its existing EMEA U.S. GAAP financial guidance in its framework because of the planned separation and subsequent UK regulatory requirements.