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Investor Roadshow | 1Q 2014
Transcript
  • Investor Roadshow | 1Q 2014

  • Investor Roadshow | May 7, 2014 2

    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 increases 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) whether we experience a material disruption at one of our

    manufacturing facilities; (vi) risks inherent in conducting business through a joint venture; (vii) the receipt of

    governmental and other approvals and favorable rulings associated with the agreed-upon transaction

    combining xpedx with Unisource, the successful fulfillment or waiver of all other closing conditions for such

    transaction without unexpected delays or conditions, and the successful closing of such transaction within

    the estimated timeframe; and (viii) our ability to achieve the benefits we expect from all 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.

  • Investor Roadshow | May 7, 2014

    Statements Relating to Non-GAAP Financial Measures

    During the course of this presentation, certain non-U.S. GAAP financial information

    will be presented.

    A reconciliation of those numbers to U.S. GAAP financial measures is available on

    the company’s website at internationalpaper.com under Investors.

    3

  • Investor Roadshow | May 7, 2014

    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. Ilim management has indicated that the financial information

    was prepared in accordance with International Financial Reporting Standards and

    extracted from Ilim’s financial statements, but International Paper has not verified or

    audited any of this information. 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

  • Investment Thesis

  • Investor Roadshow | May 7, 2014 5

    IP Investment Thesis | Why IP Will Outperform

    Vision

    Leadership position

    Attractive markets

    Low-cost assets

    Generating…

    Strong FCF

    Returns above cost-of-capital

    • Global packaging and paper platforms

    • Leadership positions in scale businesses

    • Operational excellence

    • Operate in key markets where we can grow profitably

    ROIC Consistently >WACC FCF Strong Sustainable Improving Capital Allocation ✔ Value Creation ✔ Return Cash to Shareholders

    Strategy Shareholder Value

  • Investor Roadshow | May 7, 2014 6

    Why Invest in IP?

    Strong Management Team

    ROIC Above WACC

    with Further Margin Expansion

    Strong, Healthy Balance Sheet Enables Greater

    Commitment to Return Cash to Shareholders

    Robust, Improving Free Cash Flow Generation

    Less Cyclical Business Results from Refocused Portfolio

  • Investor Roadshow | May 7, 2014

    Global Economic

    Recession

    Returns on Invested Capital1 above our Cost of Capital

    7

    4.5%

    6.3%

    7.5%

    6.5%

    5.0%

    8.1%

    9.4%

    8.2%

    9.2%

    1%

    2%

    3%

    4%

    5%

    6%

    7%

    8%

    9%

    10%

    2005 2006 2007 2008 2009 2010 2011 2012 2013

    ROIC WACC

    1 ROIC = [Operating Earnings before Interest] / [Equity (adjusted for pension) + Interest-Bearing Debt]

    2010 – 2013

    8.7% (average ROIC)

  • Investor Roadshow | May 7, 2014

    Global Economic

    Recession

    Strong, Sustainable Free Cash Flow

    Free cash flow, based on data in the 10-K for each year at the time of filing.

    Excludes net cash pension contributions impacting 2006, 2010, 2011 & 2013, cash flows under European accounts receivable securitization beginning in 2009 and

    ending in 2011, and cash received from Black Liquor Tax Credits in 2009 and 2010. 2012 excludes $120MM cash paid for Temple-Inland change-in-control

    agreements, $251MM cash received from unwinding a timber monetization, $44MM cash paid for Temple-Inland pension plan contribution, and $80MM cash paid for

    Guaranty Bank settlement. 2013 excludes $31MM cash paid for pension plan contribution and $30MM cash received from Guaranty Bank insurance reimbursements.

    Transformation:

    $0.7 Billion (average)

    Excluding land sales:

    $0.4 Billion (average)

    2010 – 2013

    $1.7 Billion (average)

    $0.0

    $0.5

    $1.0

    $1.5

    $2.0

    $2.5

    2005 2006 2007 2008 2009 2010 2011 2012 2013

    $ B

    illi

    on

    s

    8

  • Investor Roadshow | May 7, 2014 9

    Delivering Results

    2012 2013 Near-term

    Target

    EBITDA ($Billion) 3.7 4.1 5.1

    EBITDA Margin 13% 14% 15%

    Free Cash Flow1,2 ($Billion) 1.6 1.8 2.2

    ROIC 8% 9% 12%

    From continuing operations before special items and non-operating pension expense 1 2012 excludes $120MM cash paid for Temple-Inland change-in-control agreements, $44MM cash paid for Temple-Inland pension plan contribution, $80MM

    cash paid for Guaranty Bank settlement, and $251MM cash received from unwinding a timber monetization. 2 2013 excludes $31MM cash paid for pension plan contribution and $30MM cash received from Guaranty Bank insurance reimbursements.

    Near-term Target as of Investor Day 2012 excludes similar items.

  • Investor Roadshow | May 7, 2014 10

    Long-Term Runway

    Strategically

    Consistent,

    Accretive M&A

    High Return

    Capital Projects

    Profitable Growth in

    Emerging Markets

    Continued Optimization

    of Strong NA Platforms

    Mogi Guacu Biomass Boiler

  • Investor Roadshow | May 7, 2014 11

    Delivering on Our Commitments

    Running our businesses well and generating higher levels of FCF;

    Returns consistently above cost of capital

    Strengthening Balance Sheet

    Reduced balance sheet debt ~$2.5B since 1Q12

    Achieved Moody’s debt coverage target of

  • Investor Roadshow | May 7, 2014

    Dividend Potential | Continuing Growth

    12

    $1.05 per

    share

    $1.20 per

    share

    $1.40 per

    share

    ~$1.60 – $2.00

    per share

    $0

    $100

    $200

    $300

    $400

    $500

    $600

    $700

    $800

    $900

    $1,000

    4Q11 4Q12 4Q13 Potential

    An

    nu

    ali

    ze

    d

    Div

    ide

    nd

    P

    ayo

    ut

    2

    $460

    $530

    $615

    $660-$880

    $ Millions

    1

    Increasing Cash to Shareholders

    1 Total annual dollars based on 30%-40% of mid-cycle potential FCF of $2.2B as shared at May 2012 Investor Day 2 Based on potential post buyback share count (~420MM shares)

  • Investor Roadshow | May 7, 2014

    IP’s Balanced Use of Cash | Return Cash to Shareowners

    13

    $1.5B Share Buyback Program

    Authorized September 10, 2013

    Since 4Q13 call (Feb. 4) purchased ~$460MM

    (~10MM shares at average price of ~$46)

    Total program purchases through April 29 of ~$992MM

    (~21.7MM shares at average price of $45.80)

  • Investor Roadshow | May 7, 2014 14

    What Makes IP Different? | Key Levers and Runway

    Enterprise

    • Manufacturing expertise with low-cost assets

    • People Capability

    • EBITDA growth based on IP specific initiatives

    • Ramping dividend and sizeable share repurchase program

    • Attractive FCF yield with improving FCF

    • Strong positions – best margins

    • Industrial Packaging optimization

    • Consumer Packaging foam to paper cup conversions

    • Papers repositioning post Courtland

    • xpedx spin

    • Leveraging global platform for profitable growth

    • Coated Paperboard quality project at Kwidzyn

    • Packaging synergies at Orsa

    • Ilim ramp up

    North America Global

  • Business Overview

  • Investor Roadshow | May 7, 2014

    IP Transformation Timeline/Plan

    2005 - 2007 2008 - 2010

    2011 2012+

    Transformation Plan

    Divestitures & Strategic

    Reinvestment

    Global Recession IP Achieves Cost of Capital Returns

    NA Weyco Pkg.

    Acquisition

    Russia

    Ilim JV

    India APPM

    Acquisition China

    Sun JV

    Brazil

    VCP Land / Mill Swap

    Coated Papers

    Wood Products

    Forestland

    Kraft Paper

    Chemicals

    Beverage Pkg.

    $11B

    Asset Sales

    China

    SCA Pkg.

    Brazil

    Grupo Orsa Pkg.

    NA TIN

    Acquisition

    Turkey

    Olmuksan Pkg.

    15

    Franklin

    Fluff Pulp

    Conversion

    TIN Bldg.

    Products

    Sale

  • Investor Roadshow | May 7, 2014 16

    North America

    Brazil

    EMEA & Russia

    India

    China

    North America

    Recognized Leader in Core Segments:

    Corrugated Pkg. Uncoated Papers

    Coated Paperboard

    Emerging Markets Build Leading Positions in Fiber-based Packaging

    & Paper Segments in High-Growth Markets

    Positioned in attractive markets with low-cost assets that can generate strong free cash flow and returns that can exceed our cost-of-capital

    $22.5B Net Sales

    $1.4B Net Sales

    $3.1B Net Sales

    $1.9B Net Sales

    $0.2B Net Sales

    Full-year 2013 net sales data 1 Ilim JV total sales are not consolidated (IP owns 50% of JV)

    International Paper | Global Portfolio in Packaging and Paper

    $1.9B1 Ilim JV Total Sales

  • Investor Roadshow | May 7, 2014

    Repositioned & Well-Positioned | Leading Global Positions

    17

    1st in NORTH AMERICA in corrugated packaging & coated paperboard

    2nd in NORTH AMERICA in uncoated freesheet

    1st in LATIN AMERICA in uncoated freesheet

    PULP

    1st in RUSSIA in paper & pulp

  • Investor Roadshow | May 7, 2014

    EBITDA Margin

    2005 2013

    Industrial Packaging

    North America1 9% 22%

    Brazil – 8%

    Printing Papers

    North America2 10% 12%

    Europe & Russia3 16% 18%

    Brazil 33% 31%

    Consumer Packaging

    North America4 14% 13%

    Europe 26% 32%

    Segment operating profit before special items 1 Includes Corrugated Packaging, Saturating Kraft & Bag businesses; excludes Recycling business and revenue from trade volumes 2 Includes Bleached Kraft (excludes Pulp) 3 Uncoated Papers (excludes Pulp) 4 Includes Foodservice business

    18

    Repositioned & Well-Positioned | Primary Integrated Mill Business Margins

  • Investor Roadshow | May 7, 2014 19

    Global Segment Profile | 2013 EBITDA1

    Printing

    Papers

    24%

    Industrial

    Packaging

    65%

    Consumer

    Packaging

    10%

    North America

    79% Brazil 9%

    Europe 7%

    Russia 4%

    Asia 1%

    1 From continuing operations before special items and non-operating pension expense

    Does not reflect equity earnings from Ilim JV; xpedx is the remaining 1% of 2013 segment EBITDA

  • Investor Roadshow | May 7, 2014

    Global Recession

    NA Industrial Packaging | Track Record of Success

    20

    0.3 0.4 0.5

    0.8

    1.3 1.3 1.6

    2.0

    2.5

    9%

    13% 15% 15%

    19% 18%

    20% 19%

    22%

    0%

    5%

    10%

    15%

    20%

    25%

    2005 2006 2007 2008 2009 2010 2011 2012 2013

    Bu

    sin

    es

    s

    EB

    ITD

    A ($

    B)

    Weyco Packaging Acquisition &

    Integration

    TIN Acquisition &

    Integration EBITDA %

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

    Excludes the Recycling Business and revenue from trade volumes

    Growth and Margin Expansion through Strategic Acquisitions

    and Successful Integrations

  • Investor Roadshow | May 7, 2014

    $549

    $676 $568

    1Q13 4Q13 1Q14

    EBIT1 ($MM)

    21

    First Quarter 2014 Results

    1 From continuing operations before special items and non-operating pension expense

    Solid results despite NA weather impact in

    quarter (~$60MM)

    Higher pricing momentum in most global

    businesses

    Record 1Q results in NA Industrial Packaging

    Good execution on maintenance outages

    Courtland closure complete; costs ramping

    down

    xpedx spin progressing toward early 3Q close

    Significantly improved Ilim operational

    EBITDA

    Share buyback program well ahead of plan

  • Investor Roadshow | May 7, 2014

    1Q14 Financial Results

    1Q13 4Q13 1Q14

    Sales ($B) $7.1 $7.2 $7.0

    EBIT1 ($MM) $549 $676 $568

    EPS2 $0.65 $0.83 $0.61

    EBITDA1 ($MM) $928 $1,047 $920

    EBITDA Margin1 13.1% 14.4% 13.1%

    Free Cash Flow ($MM)

    $300 $595 $2543

    1 From continuing operations before special items and non-operating pension expense 2 EPS based on Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and non-operating pension expense) 3 Excludes $58MM cash paid for pension plan contribution

    22

    $928 $1,047

    $920

    1Q13 4Q13 1Q14

    EBITDA1 ($MM)

  • Investor Roadshow | May 7, 2014 23

    Summary

    Runway from current initiatives (NA and Global)

    Strong FCF and Healthy Balance Sheet drives

    increased Capital Allocation opportunities

    Pipeline of High Return Capital Projects

    Less Cyclical Earnings with Higher Returns

    On track to reach near-term goals of

    $5.1B EBITDA and $2.2B FCF

  • Appendix

  • Investor Roadshow | May 7, 2014

    Appendix - Table of Contents

    Industrial Packaging……………….……………………………………..25-34

    Consumer Packaging……….….………………………….……………..35-41

    Printing Papers & Pulp..……….………………………………………...42-61

    Ilim Group.…………………………….……………………………………62-68

    Financial & Other………………….……………………………………....69-81

    Contact Information……………….………………………………………….82

    Slides

  • Investor Roadshow | May 7, 2014

    North American Containerboard | Supply Positions

    Stone 13%

    Smurfit 7%

    GP 9%

    WY 7%

    IP 7% TIN 7%

    Others 50%

    Note: 2014 producer position based on 2013 RISI capacity reports adjusted for Kapstone and PCA acquisitions and Norampac’s new Niagra Falls PM

    1998, 2014 Source: SEC Filings, RISI, IP Analysis

    1995 Producer Position

    Top 5 = 43%

    2014 Producer Position

    Top 5 = 75%

    IP 34%

    RKT 19%

    GP 10%

    PCA 8%

    Norampac 4%

    Others 25%

    25

  • Investor Roadshow | May 7, 2014 26

    IP North American Industrial Packaging | Balanced Global Strategy

    IP’s market access provides choices for maximizing value

    NA Mill System Capacity ~13 Million Tons

    IP Box Plants ~80%

    Open Market ~20%

    U.S. ~93%

    Non-U.S. ~7%

    Export ~55%

    Domestic ~45%

    EMEA

    ~35% Lat Am ~45%

    Asia ~20%

    1 Includes Saturating Kraft /Gypsum Liner

    2 Estimated 2014 purchases from divested mills

    Source: IP analysis

    Outside Purchases2

    ~550M tons

    Containerboard ~12.6 Million Tons

    Other Uses1 ~0.4 Million Tons

    Global Customers

  • Investor Roadshow | May 7, 2014

    Global Containerboard Industry | Total Containerboard Trade Flows - 2013

    Net Import Locations Net Export Locations Source: RISI, PPPC

    Global Demand = 163MM tons

    Import

    (3.4)MM

    Import

    (1.0)MM

    3.8% Export

    0.2 MM

    13.6% Export

    5.0 MM

    8.6% Export

    0.3 MM

    30.0% Export

    0.7 MM

    Import

    (1.0)MM

    27

  • Investor Roadshow | May 7, 2014 28

    IP NA Containerboard Mill System | 13 Million Tons Capacity

    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

    1800

    2000

    Va

    llia

    nt

    Ma

    nsfi

    eld

    Pra

    ttvil

    le

    Sa

    va

    nn

    ah

    Ce

    da

    r R

    ap

    ids

    Cam

    pti

    Ro

    me

    Pin

    e H

    ill

    Bo

    ga

    lus

    a

    Ora

    ng

    e

    Sp

    rin

    gfi

    eld

    Vic

    ks

    bu

    rg

    Ma

    ys

    vil

    le

    Pe

    nsa

    co

    la

    New

    po

    rt

    Hen

    de

    rso

    n

    Xa

    lap

    a

    Th

    ou

    sa

    nd

    To

    ns

    Source: IP analysis, chart includes Saturating Kraft & Gypsum liner

  • Investor Roadshow | May 7, 2014

    $0

    $100

    $200

    $300

    $400

    $500

    $600

    $700

    $800

    $900

    $1,000

    0 5,000 10,000 15,000 20,000 25,000 30,000

    Ma

    nu

    fac

    turi

    ng

    Co

    sts

    ($

    /To

    n)

    Cumulative Annual Capacity (Thousand Tons)

    Cash Costs + Delivery to Chicago

    Rome 2

    Global Cost Curve | 95% of Capacity in 1st & 2nd Cost Quartiles

    Source: Poyry Costrac 4Q13 42# Global Kraft Linerboard cash cost per ton delivered to Chicago

    Prattville 1

    Orange 2

    Prattville 2

    Mansfield 3

    Cedar

    Rapids 2

    Savannah 8

    Valliant 1

    Savannah 6

    Campti 2

    Mansfield 1

    Springfield 2

    Vicksburg 6

    Rome 1

    Campti 1

    Pensacola 5

    Bogalusa 7

    Maysville 1

    Pine Hill 1 Henderson 1

    Bogalusa 8

    29

    Orange 1

  • Investor Roadshow | May 7, 2014

    NA Industrial Packaging Relative EBITDA Margins

    1 Reflects Company’s change in accounting method beginning in 1Q14

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

    Excludes the Recycling Business and revenue from trade volumes

    Competitor EBITDA margin estimates obtained from public filings and IP analysis

    19.2%

    19.4%

    13.9%

    23.0% 21.9%

    16.9%

    22.5% 21.2%1

    15.2%

    IP PCA RockTenn

    1Q13 4Q13 1Q14

    30

    22.3%

    20.9%

    17.5%

    2013

    2013 2013

  • Investor Roadshow | May 7, 2014

    Note: IP Mix, 2013. Industry Mix, 2012.

    Source: IP Analysis

    IP Well-Positioned in Attractive Customer Segments

    58% 27%

    15%

    IP Box Shipments by Segment

    31

    Market Segment IP

    Mix

    Industry

    Mix

    Food & Beverage 58% 47%

    Processed Food

    Protein

    Produce

    Beverage

    Other Non-Durable Goods 27% 36%

    Paper Products

    Chemicals & Pharma

    Other Non-Durables

    Durable Goods & Distribution 15% 16%

    Building Materials

    Other Durables

    Shipping & Distribution

  • Investor Roadshow | May 7, 2014

    U.S. Containerboard | Industry Statistics

    200

    300

    400

    500

    600

    700

    800

    $/short ton

    Containerboard Pricing

    Linerboard Medium

    Source: RISI

    32

    $200

    $300

    $400

    $500

    $600

    $700

    $800

    Jan-90 Jan-95 Jan-00 Jan-05 Jan-10

  • Investor Roadshow | May 7, 2014 33

    Economic indicators and US box demand

    Source: Global Insight US Short Term Forecast, April 2014; RISI World Forecast- North America, March 2014

    70

    80

    90

    100

    110

    120

    130

    20

    01

    20

    02

    20

    03

    20

    04

    20

    05

    2006

    2007

    2008

    20

    09

    20

    10

    20

    11

    20

    12

    20

    13

    Ind

    exed

    10

    0 =

    20

    01

    US Box Shipments US Nondurable Industrial Production US GDP US Industrial Production

  • Investor Roadshow | May 7, 2014

    373 378

    390 396

    405 401

    380 379 380

    391 391 395

    390

    374

    345

    357 359 360 360 365

    371 376 373

    381

    250

    275

    300

    325

    350

    375

    400

    425

    19

    95

    19

    96

    19

    97

    19

    98

    19

    99

    20

    00

    20

    01

    20

    02

    20

    03

    20

    04

    20

    05

    20

    06

    20

    07

    20

    08

    20

    09

    20

    10

    20

    11

    20

    12

    20

    13

    20

    14

    20

    15

    20

    16

    20

    17

    20

    18

    BS

    F

    RISI Forecast

    U.S. Corrugated Packaging | Forecast

    34

    Historical Data Source: Fibre Box Association

    2014-2018: 1.1% CAGR (RISI - 2014 5-yr forecast)

  • Investor Roadshow | May 7, 2014

    IP Global Coated Paperboard Footprint | Total of 3.5 Million Tons

    Coated paperboard mill

    North America

    1.6 Million Tons

    Europe/Russia

    370,000 Tons

    Asia Sun Paper JV

    1.5 Million Tons

    35

  • Investor Roadshow | May 7, 2014

    25%

    40%

    58%

    4%

    24%

    13%

    22%

    9%

    14%

    22%

    7%

    60%

    19%

    9% 6%

    11%

    15% 9%

    15%

    3%

    14%

    1%

    Folding 2.2 MM tons

    Cup 1.0 MM tons

    Coated Bristols

    0.4 MM tons

    Liquid 1.4 MM tons

    Supply Position by Segment

    North American Solid Bleached Sulphate Capacity

    Folding includes tobacco; Liquid Packaging includes Aseptic

    Source: 2012 RISI Capacity (includes Ctd. Bristols); AF&PA; IP Analysis

    CAGR Flat CAGR +2% CAGR (4%) CAGR (1%)

    IP 25%

    MWV 23%

    GP 13%

    Rank Group 13%

    Clearwater 12%

    RKT 7%

    Weyco 4%

    Coated Paperboard 2013 Supply Position (SBS)

    6.3 MM Tons

    36

  • Investor Roadshow | May 7, 2014

    North American Consumer Packaging at a Glance

    • 2013 Sales: $1.5 B

    • 1.6 MM SBS sales tons

    • 78% external

    • 2013 Sales: $0.6 B

    • Consumes almost 0.2 MM

    tons of IP’s Coated

    Paperboard

    • Hot and cold cups

    • Food buckets & containers

    • Lids

    Specialty Coffee

    Theater, Convenience,

    Hospitality

    Folding Carton

    560m tons

    Cupstock 400m tons

    NA Consumer Packaging Business

    Coated Paperboard

    Foodservice Business

    Quick Service

    Commercial Printing

    240m tons

    Coated Paperboard mill Foodservice plant

    37

  • Investor Roadshow | May 7, 2014

    NA Coated Paperboard Historical Financials

    219 200 187 211

    251

    358

    254 263

    15%

    13%

    11%

    15% 16%

    22%

    17%

    14%

    0%

    5%

    10%

    15%

    20%

    25%

    0

    50

    100

    150

    200

    250

    300

    350

    400

    2006 2007 2008 2009 2010 2011 2012 2013

    EBITDA

    $ MM

    EBITDA

    %

    Segment operating profit before special items

    38

  • Investor Roadshow | May 7, 2014

    NA Consumer Packaging EBITDA Margins

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

    Competitor adjusted EBITDA margins obtained from public filings and IP analysis; reflects Food & Beverage segment

    13.0%

    8.4% 8.8%

    11.6%

    7.3%

    10.5%

    IP MWV

    1Q13 4Q13 1Q14

    39

    13.5%

    11.0%

    2013

    2013

  • Investor Roadshow | May 7, 2014

    U.S. Coated Paperboard | Industry Statistics

    $450

    $550

    $650

    $750

    $850

    $950

    $1,050

    $1,150

    $1,250

    $/short ton Folding Cartonboard Prices

    Bleached Unbleached Recycled

    Source: RISI

    40

  • Investor Roadshow | May 7, 2014 41

    Consumer Packaging Earnings Runway

    Market Fundamentals

    NA SBS industry backlogs remain strong at 5 weeks,

    up over 20% vs. a year ago

    Continued realization of $50/ton March 1 price increase

    IP continues to capitalize on the growing shift from foam-based cups

    to paper cups (benefits Coated Paperboard and Foodservice businesses)

    Kenton, OH foodservice facility expansion

    complete by mid-2015 • $60-70MM investment

    • Adding 250,000 sq. feet and 125 jobs

    Kwidzyn, Poland investment in coated paperboard machine

    completed 1st quarter. Enhances product quality and service

    platform for regional folding boxboard market

    Foam 31

    Plastic 21

    Paper Hot 18

    Paper Cold

    38

    2014 U.S. Cup Demand (Billions of Units)

    Every 1 Billion Foam & Plastic

    Cups Converted to Paper = 15 – 25 Thousand Tons of Coated Paperboard Demand

  • Investor Roadshow | May 7, 2014 42

    IP Global Papers Footprint | Total of 4.4 Million Tons1

    1 Does not include llim JV

    Brazil

    1.1 MM

    N. America

    2.0 MM

    Europe

    0.7 MM

    Russia

    0.4 MM

    Uncoated paper mill

    India

    0.2 MM

    ILIM

    0.2 MM

  • Investor Roadshow | May 7, 2014

    GP 15%

    IP 13%

    Champion 10%

    Boise 10% Willamette

    9%

    WY 9%

    Union Camp

    9%

    Other 25%

    1998 Producer Position Top 2 = 28%

    Top 4 = 48%

    2014 Producer Position Top 2 = 57%

    Top 3 = 67%

    Note: 2014 producer position adjusted for GP Crossett, Boise International Falls, Lincoln Paper, and IP Courtland.

    1998, 2014 Source: Poyry Consulting, Fisher International, IP Strategic Planning

    NA Uncoated Freesheet Supply | Supply Positions

    43

    Domtar 38%

    IP 19%

    PCA 10%

    GP 10%

    Other 24%

  • Investor Roadshow | May 7, 2014

    Ticonderoga

    Georgetown Riverdale

    Eastover

    Specialty Paper Mills Commodity Mills

    Exiting Coated Freesheet

    Select Grades

    Select Export

    Specialty Papers

    Specialty Papers

    Uncoated

    Freesheet

    Courtland

    NA Printing Papers | Stronger Business in Future Due to Restructuring

    Capabilities well balanced between commodity and specialty paper mills

    Uncoated

    Freesheet

    44

  • Investor Roadshow | May 7, 2014

    0%

    20%

    40%

    60%

    80%

    100%

    Riverdale Ticonderoga Eastover Georgetown Franklin Riegelwood Pensacola

    % G

    rad

    e / M

    ix

    Pulp Non UFS Uncoated Freesheet Coated Paperboard Containerboard 1

    Printing Papers & Pulp Mill System | 3.4MM Tons Capacity

    1 Non UFS includes Kraft Bag and Uncoated Bristols

    Source: IP Finance

    Paper

    (M Tons) 650 300 730 320 0 0 0

    Pulp

    (M Tons) 0 0 110 360 300 475 165

    Tenant Mills

    Cap

    ac

    ity

    45

  • Investor Roadshow | May 7, 2014

    Uncoated Freesheet Global Cost Curve | 95% of Capacity in 1st & 2nd Cost Quartiles

    $0

    $200

    $400

    $600

    $800

    $1,000

    $1,200

    $1,400

    $1,600

    0 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 22,500 25,000 27,500 30,000 32,500 35,000

    Ma

    nu

    fac

    turi

    ng

    Co

    sts

    $/T

    on

    Cumulative Capacity (Thousand Tons)

    Cash + Delivery to Chicago

    Ticonderoga 7

    Based on Poyry’s 2013 CostTrac model at 4th Quarter, 2013, Prices and Exchange Rates.

    Eastover 2

    Eastover 1

    Riverdale 15

    Riverdale 16

    Georgetown 1

    Ticonderoga 8

    50# Roll Offset

    46

  • Investor Roadshow | May 7, 2014

    317

    575

    657 657

    513 539

    598

    499

    310

    10%

    16%

    19% 19% 18%

    20%

    22%

    18%

    12%

    0%

    5%

    10%

    15%

    20%

    25%

    0

    200

    400

    600

    800

    1,000

    2005 2006 2007 2008 2009 2010 2011 2012 2013

    EBITDA %

    EBITDA $ MM Paper Only

    North American Printing Papers | Attractive Margins & Cash Flow

    Tons (MM)

    4.0 4.1 3.9 3.5 3.0 2.8 2.7 2.7 2.6

    Segment operating profit before special items

    47

  • Investor Roadshow | May 7, 2014

    N.A. Printing Papers Relative EBITDA Margins

    13.2%

    14.9%

    12.8% 13.4%

    6.6%

    13.0%

    IP Domtar

    1Q13 4Q13 1Q14

    48

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

    Competitor EBITDA margin estimates obtained from public filings and IP analysis

    EBITDA margins reflect the Printing Papers and Pulp businesses

    11.4%

    2013 2013

    12.0%

  • Investor Roadshow | May 7, 2014

    NA Uncoated Freesheet Consumption | Developed World Convergence

    North America

    Japan

    W. Europe

    High Broadband Countries1

    NA UFS MM

    Tons

    9

    7

    BRIC Countries

    1 Korea, Singapore, Denmark, Netherlands, Switzerland

    Source: Poyry Consulting, IP Strategic Planning

    16

    49

    0

    5

    10

    15

    20

    25

    30

    35

    40

    45

    50

    1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

    UF

    S C

    on

    su

    mp

    tio

    n K

    g p

    er

    Cap

    ita

    North America

    Japan

    W. Eur. w/o Greece

    High Broadband

    BRIC Avg.

  • Investor Roadshow | May 7, 2014

    U.S. Uncoated Freesheet Demand

    Historical Data Source: AF&PA

    2014 – 2018: -3.1% CAGR (RISI 2014 5-yr Forecast)

    11.6 12.2 12.4

    13.3 13.0 13.2

    13.7 13.6 14.0 13.9

    12.6 12.4 12.3 12.6

    12.0 12.3

    11.9

    10.9

    9.7 9.6 9.3

    8.9 8.7 8.3 8.1 7.8

    7.5 7.3

    91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

    RISI Forecast

    Mil

    lio

    n T

    on

    s

    UFS Shipments

    50

  • Investor Roadshow | May 7, 2014

    U.S. Uncoated Freesheet | Industry Statistics

    $500

    $600

    $700

    $800

    $900

    $1,000

    $1,100

    $1,200

    $500

    $600

    $700

    $800

    $900

    $1,000

    $1,100

    $1,200

    $/short ton

    UFS Pricing Trends

    RISI 20# Cutsize RISI 50# Offset

    Source: RISI

    51

  • Investor Roadshow | May 7, 2014

    35%

    30%

    6%

    4%

    4%

    3%

    18%

    Latin American Uncoated Freesheet Market

    0

    50

    0

    1,0

    00

    1,5

    00

    2,0

    00

    2,5

    00

    Brazil

    Argentina

    Colombia

    Chile

    Peru

    Venezuela

    Other …

    Thousand Metric Tonnes

    Demand

    Capacity

    Latin America is a Net Exporter

    Demand Capacity @

    91% Op. Rate* Net Exports

    2.7 MM 2.8 MM 0.1 MM * Excluding Mexico

    Supply & Demand

    52

    Source: Bracelpa/ AFCP / RISI/ Fisher/ IP Estimates; Units shown in metric tonnes

    Top 6 Producers > 80%

    Others

    Smurfit

    Kappa

    Ledesma

    Celulosa

    Argentina

    Propal

    IP

    Suzano

  • Investor Roadshow | May 7, 2014

    IP do Brasil | At a Glance

    Mogi Guacu Luiz Antonio Três Lagoas IP Brazil

    Paper

    Machines 4 2 1 7

    UFS

    Capacity (Thousand MT)

    424 367 234 1,025

    Market Pulp (Thousand MT)

    8 103 0 111

    53

    Units shown in metric tonnes

  • Investor Roadshow | May 7, 2014

    IP do Brasil | Historical Financials

    54

    280

    320

    230

    300 320

    293

    334

    33% 33%

    24%

    27% 27% 26%

    31%

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    35%

    0

    50

    100

    150

    200

    250

    300

    350

    400

    450

    2007 2008 2009 2010 2011 2012 2013

    EBITDA

    US$ MM EBITDA

    Margin

    Segment operating profit before special items

    Tons (MM)

    0.9 1.0 1.2 1.2 1.3 1.3 1.3

  • Investor Roadshow | May 7, 2014

    Margin Improvement From Geography Shift

    55

    Europe & Others Other Latin America Brazil

    ~3.5X

    ~1.8X

    Improve Geographic Mix from 75% to 100% in Latin America

    2013

    U.S. $

    EBITDA / ton Avg FX 2.15

    U.S. $132 U.S. $252 U.S. $455

  • Investor Roadshow | May 7, 2014

    India Will Become #2 Global Market in Uncoated Freesheet

    Total Uncoated Freesheet

    Consumption 2009

    Total Uncoated Freesheet

    Consumption 2015

    Total Uncoated Freesheet

    Consumption 2025

    13,100

    10,400

    6,800

    3,950

    3,800

    3,700

    1,400

    1,350

    1,350

    1,250

    1,000

    China

    NA

    WE

    Japan

    Rest of Asia

    India

    LA exc. BZ

    Brazil

    Indonesia

    CIS inc. Ru

    C&EE

    19,700

    8,500

    7,450

    5,950

    4,400

    2,850

    2,600

    2,580

    2,200

    1,950

    1,200

    China

    India

    NA

    WE

    Rest of Asia

    Japan

    Brazil

    LA exc. BZ

    Indonesia

    CIS inc. Ru

    C&EE

    15,650

    9,200

    6,500

    5,400

    4,000

    3,600

    1,750

    1,750

    1,650

    1,475

    1,100

    China

    NA

    WE

    India

    Rest of Asia

    Japan

    LA exc. BZ

    Brazil

    Indonesia

    CIS inc. Ru

    C&EE

    Source: IP Study w McKinsey, India update : IP Study w Poyry

    56

  • Investor Roadshow | May 7, 2014

    Global Market Pulp | Bleached Softwood Pulp

    North America North America

    Latin America Latin America

    Western Europe Western Europe

    Eastern Europe Eastern Europe

    Asia Asia

    Rest of World Rest of World

    0

    5

    10

    15

    20

    25

    30

    2013 2017

    Mil

    lio

    n M

    etr

    ic T

    on

    ne

    s

    2013 – 2017

    CAGR

    3.7%

    3.0%

    1.2%

    (2.3%)

    (2.9%)

    1.0%

    Source: PPPC; Units shown in metric tonnes

    Global Demand = 23.9 → 24.4MM mtpy

    CAGR = 0.5%

    57

  • Investor Roadshow | May 7, 2014

    Global Market Pulp | Fluff Pulp Demand

    North America North America

    Latin America Latin America

    Western Europe Western Europe

    Eastern Europe Eastern Europe

    Asia

    Asia

    Other

    Other

    0

    1

    2

    3

    4

    5

    6

    7

    2013 2017

    Mil

    lio

    n M

    etr

    ic T

    on

    ne

    s

    2013 – 2017

    CAGR

    4.7%

    6.1%

    2.3%

    1.7%

    1.1%

    2.2%

    Source: IP analysis; Units shown in metric tonnes

    Global Demand = 5.0 → 5.8MM mtpy

    CAGR = 3.6%

    58

  • Investor Roadshow | May 7, 2014

    Pulp mill

    59

    IP Global Pulp Capacity | Total of 3.1 Million Metric Tonnes

    Ilim JV

    1.5 MM

    Europe / Russia

    0.3 MM N. America

    1.2 MM

    L. America

    0.1 MM

  • Investor Roadshow | May 7, 2014 60

    Global Fluff Pulp Industry | Trade Flows – 2013

    Net Import Locations Net Export Locations

    Global Demand = 5.0MM mtpy

    Import

    (0.8)MM

    86.7% Export

    4.3 MM

    Import

    (0.4)MM

    Import

    (0.5)MM

    Import

    (2.0)MM

    Source: PPPC, IP Analysis; Units shown in metric tonnes

  • Investor Roadshow | May 7, 2014

    Pulp | Industry Statistics

    0

    200

    400

    600

    800

    1,000

    1,200

    USD/admt Global Pulp Prices

    NBSK (dne) BEK (dne) Fluff (dne)

    Source: RISI

    Global pulp prices delivered to Northern Europe; Units shown in metric tonnes

    61

  • Investor Roadshow | May 7, 2014 62

    Ilim Joint Venture | Low-Cost, Well-Positioned

    Corrugated

    Packaging Kotlas /

    Koryazhma

    Ust-

    Ilimsk

    Bratsk

  • Investor Roadshow | May 7, 2014

    World Demand for Global Market Pulp | 1995-2025

    63

    0

    10

    20

    30

    40

    50

    60

    70

    80

    1995 2000 2005 2010 2011 2015 2020 2025

    Mil

    lio

    n M

    etr

    ic T

    on

    ne

    s

    Western Europe

    North America

    China

    Rest of Asia

    Eastern Europe

    Forecast

    0

    5

    10

    15

    20

    25

    2011-2025

    China

    14.7 MM

    Rest of

    World

    4.8 MM

    Source: Poyry World Fibre Outlook 2012; Units shown in metric tonnes

    China will account

    for 75% of

    incremental growth

  • Investor Roadshow | May 7, 2014

    ILIM JV Overview

    2007 - 2011

    • IP purchased 50% of ILIM Holding in 2007 ($640MM)

    • IP received $234 million in cash dividends to date

    • IP EPS accretive – cumulative $213MM in IP equity earnings to date

    • Record ILIM Holding earnings in 2011 - $530 million EBITDA

    2012 - 2013

    • High return, strategic capital build out (Bratsk Mill new fiber line,

    Koryazhma Mill PM-7)

    2014

    • Capital projects ramp up

    64

  • Investor Roadshow | May 7, 2014

    2009 2010 2011 2012 2013

    Sales Volume (Million short tons) 2.6 2.8 2.8 2.9 2.7

    Sales ($B) 1.3 1.9 2.2 2.0 1.9

    Capital Employed ($B) 1.2 1.2 1.6 2.1 2.4

    Debt ($B) 0.4 0.5 0.9 1.2 1.5

    Operating EBITDA ($MM) 197 516 591 291 208

    F/X Gain (loss) (35) 12 (60) 39 (80)

    EBITDA ($MM) 163 528 531 330 128

    EBITDA Margin 12% 28% 24% 17% 7%

    Depreciation ($MM) 120 121 124 134 177

    EBIT ($MM) 43 407 406 196 (49)

    Interest Expense ($MM) 28 18 7 6 39

    Net Income (loss) ($MM) (19) 266 299 132 (72)

    IP Equity Earnings (loss) ($MM) (27) 103 134 56 (46)

    Dividends (to IP) ($MM) 50 34 85 0 0

    Ilim JV results are IFRS basis.

    65

    Ilim Joint Venture | Full Year Financials

  • Investor Roadshow | May 7, 2014

    Ilim Joint Venture | Pro Forma View – As Shared on February 4th Earnings Call

    $ Million ‘09-‘12

    Average1 2013 2014

    Depreciation $125 $177 ~$225

    Interest Expense $15 $39 ~$75

    66

    Ilim JV figures are on an IFRS basis with the exception of IP Equity Earnings which is US GAAP. IP position in joint venture is 50%.

    * Assumes stable FX & current pulp prices 1 See previous slide for yearly results and additional financial measures

    $388

    $128

    $270

    $350 - $400*

    ~$550 - $600*

    '09 - '12 Average 2013 2H2013 Annualized

    2014E Fully Ramped Potential

    EBITDA Ramp-Up $MM

    1

    ~$100-$120

    IP Equity

    Earnings* ~$20-$40

    IP Equity

    Earnings*

  • Investor Roadshow | May 7, 2014 67

    Ilim Joint Venture | Projects Complete

    4Q13 1Q14 2Q14F

    Total Mill Production

    Bratsk Mill Koryazhma Mill

    4Q13 Jan '14 Feb '14 March '14

    % o

    f C

    ap

    acit

    y

    PM-7 Production

    Production levels at 100% of project

    expectations in March

    Project ramp continues; Expect to

    achieve full production by end of 2014

  • Investor Roadshow | May 7, 2014

    Market Pulp Global Cost Curve | Ilim Bleached Softwood Kraft Market Pulp

    Ust-Ilimsk

    Based on Poyry’s 2013 CostTrac model at 4th Quarter, 2013, Prices and Exchange Rates. Units shown in metric tonnes

    $0

    $200

    $400

    $600

    $800

    $1,000

    0 5,000 10,000 15,000 20,000

    Ma

    nu

    fac

    turi

    ng

    Co

    sts

    ($

    /Me

    tric

    To

    nn

    e)

    Cumulative Capacity (Thousand Metric Tonnes)

    Cash + Delivery to Beijing

    68

    Bratsk

    Bratsk

    (Pre-Project)

  • Investor Roadshow | May 7, 2014

    Full-Year 2013 Financial Results | As Shared on February 4th Earnings Call

    $ Billion (Except as noted)

    2012 2013 %

    Improvement

    Sales $28 $29 4%

    EBIT1 $2.2 $2.6 15%

    EPS2 $2.65 $3.16 19%

    EBITDA1 $3.7 $4.1 11%

    EBITDA Margin 13.4% 14.2% 6%

    Free Cash Flow $1.63 $1.84 15%

    Year-End Debt $10.1 $9.5 6%

    Cash Balance $1.3 $1.8 38%

    1 From continuing operations before special items and non-operating pension expense 2 EPS based on Operating Earnings (defined as Net Earnings (GAAP) from continuing operations before special items and non-operating pension expense) 3 Excludes $120MM cash paid for Temple-Inland change-in-control agreements, $44MM cash paid for Temple-Inland pension plan contribution, $80MM cash paid

    for Guaranty Bank settlement, and $251MM cash received from unwinding a timber monetization 4 Excludes $31MM cash paid for pension plan contribution and $30MM cash received from Guaranty Bank insurance reimbursements

    69

    $1,570

    $1,801

    2012 2013

    Free Cash Flow ($MM)

    3 4

  • Investor Roadshow | May 7, 2014

    Full-Year 2014 Financial Metrics | As Shared on February 4th Earnings Call

    $ Million

    (Except as noted) 2012 2013 2014 Estimate

    Capital Spending $1.4 B $1.2 B ~ $1.4 B

    Input Cost Inflation ($113) $207 $175 – $200

    Depreciation & Amortization $1.5 B $1.5 B ~ $1.5 B

    Net Interest Expense $672 $612 ~ $625

    Corporate Items $51 $29 ~ $40

    Effective Tax Rate 29% 27% ~ 33%

    70

    Meaningful increase in EBITDA ~10%

    Free Cash Flow generation ~$2 Billion

    Capital Allocation

    Current Dividend – $1.40/share (~$650MM); more runway

    Share Buyback – ~$530MM purchased in 4½ months; ~$970MM remaining

    on authorization

    Pension Contribution – ~$450MM

    $400MM cash proceeds from pending xpedx transaction

    Continue to evaluate value-creating investments

  • Investor Roadshow | May 7, 2014

    Operating Business EPS

    2005-2006 as originally reported

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

    2005-2010 Net Earnings from continuing operations and before special items; 2010 onward reflects Operating Earnings

    71

    .36 .31

    .29

    .12 .12

    .35

    .40

    .47 .45

    .52

    .57

    .73

    .45 .49

    .41

    .15

    .07

    .27

    .38

    .22

    .09

    .49

    .89

    .74 .78

    .81 .83

    .73

    .63

    .53

    .81

    .69 .65 .64

    1.05

    .83

    .61 .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

    2005 2006 2007 2010 2008

    Impact of Mineral

    Rights Gain

    2009

    .83

    2011

    .97

    Final Land Sale

    2012 2013

  • Investor Roadshow | May 7, 2014 72

    Balance Sheet | Debt Coverage – As Shared on February 4th Earnings Call $ B

    illio

    n

    $4.1 Pension Gap

    3.8x

    2.9x

    $10.1 Balance

    Sheet

    Debt

    $9.5 Balance

    Sheet

    Debt

    $1.2 Op. Lease Adj. $1.2 Op. Lease Adj.

    $2.2 Pension Gap

    [2.7x]1 [2.3x]2

    2013 2012

    Adjusted Debt reflects gross balance sheet debt plus pension gap and operating leases (Moody’s Methodology)

    Adjusted EBITDA of $4.4B incorporates pension and lease expense adjustments (Moody’s Methodology) 1 Simple Debt Coverage: Balance Sheet Debt / 2012 Reported EBITDA of $3.7B 2 Simple Debt Coverage: Balance Sheet Debt / 2013 Reported EBITDA of $4.1B 3 AA Corporate Bond Rate

    Moody’s Target: Adjusted Debt < 3X Adjusted EBITDA

    Reduced Balance Sheet debt $2.5B

    since Temple-Inland acquisition;

    $650MM paid in 2013

    Pension Gap decreased by $1.9B

    due to asset performance and

    discount rate3 increase

    Achieved Moody’s debt coverage

    target of < 3X adjusted EBITDA

    as of year end 2013

    $1.8B cash balance at year end

  • Investor Roadshow | May 7, 2014

    $0

    $200

    $400

    $600

    $800

    $1,000

    $1,200

    $1,400

    $1,600

    $1,800

    $2,000

    2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040

    Mil

    lio

    n

    Debt Maturities Monetization & Other

    1 Timber Monetization debt and other debt intended to be rolled over or refinanced, (Sun joint venture debt and other foreign subsidiary debt)

    Debt Maturity Profile | Maturities as of December 31, 2013

    73

    1

  • Investor Roadshow | May 7, 2014

    25%

    50%

    75%

    100%

    125%

    $0

    $300

    $600

    $900

    $1,200

    $1,500

    2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E

    Maintenance Regulatory Strategic Cost Reduction % of Depreciation

    $ Million % of Depreciation

    Reflects continuing operations

    Capital Spending

    74

    ~$1,400

  • Investor Roadshow | May 7, 2014

    Pension Plan Update | As of December 31, 2013

    • No contribution 1960-2005; $2.5B

    contribution 2006-2011

    • In 2012, no IP plan contribution and

    $44MM for TIN plan

    • $31MM contribution made in 2013

    • 2014 pension contribution ~$450MM

    • Further contributions expected over

    2015/16 timeframe

    ($0.2)

    ($3.2)

    ($2.8)

    ($1.5)

    ($2.4)

    ($2.7)

    ($4.1)

    ($2.2)

    Billio

    n

    Year-End Funded Status1

    75

    1 Reflects status as of December 31

  • Investor Roadshow | May 7, 2014

    Pension Plan Update1 | As of December 31, 2013

    231 195

    342

    545

    366

    $0

    $150

    $300

    $450

    $600

    2010 2011 2012 2013 2014E

    Millio

    n

    Annual Pension Expense2 Key Variables 2012 2013 2014E

    Assumed Rate of Return

    8.0% 8.0% 7.6%

    Discount Rate 5.1% 4.1% 4.9%

    Average Annualized Returns3

    2013 14.1%

    Past Five Years 13.7%

    Past Ten Years 8.8%

    Portfolio Asset Allocation at 12-31-13

    Target Actual

    Equity 42% - 53% 49%

    Bonds 30% - 40% 32%

    Real Estate 6% – 12% 10%

    Other 3% - 15% 9%

    1 2013 and onward include Temple-Inland pension plan 2 Non-cash expense for U.S. plans only 3 Through December 2013

    Pension expense reflects service cost, interest cost, amortization of actuarial losses and expected return on plan assets

    For the past 10 years, IP Pension Plan performance ranked in the top decile of the State Street Bank Corporate and Public Master Trust Universe of 241 observations

    76

  • Investor Roadshow | May 7, 2014

    Maintenance Outages Expenses | 2014

    $ Million 1Q14 2Q14F 3Q14F 4Q14F 2014F

    Industrial Packaging $69 $88 $28 $43 $228

    North America 69 88 25 43 225

    Brazil 0 0 3 0 3

    Printing Papers Total $31 $64 $28 $46 $169

    North America 30 39 12 38 118

    Europe 1 24 1 0 26

    Brazil 0 1 12 8 21

    India 0 0 3 0 3

    Consumer Packaging $20 $28 $0 $14 $62

    North America 20 20 0 14 54

    Europe 0 8 0 0 8

    Total Impact $120 $180 $56 $103 $459

    77

  • Investor Roadshow | May 7, 2014

    129 94

    19

    127 167

    99 88 46

    118

    78 143 300 49

    30

    1 70

    276

    60

    Maintenance Market

    Coated Paperboard1

    18 6

    22 13 1

    24 24 15

    18 53 27

    24

    59

    14

    52

    2

    38

    18

    53

    19

    58

    16

    North American Downtime

    15 18 1 8

    14 21 20

    2 15

    Containerboard Uncoated Papers

    Market Pulp

    Th

    ou

    sa

    nd

    To

    ns

    Th

    ou

    sa

    nd

    To

    ns

    Th

    ou

    sa

    nd

    To

    ns

    Th

    ou

    sa

    nd

    To

    ns

    207

    1Augusta PM#2 was permanently shutdown in March 2013 (36000 tons / quarter)

    237

    36

    319

    49

    176

    78

    197

    100

    158

    322

    178

  • Investor Roadshow | May 7, 2014

    Total Cash Cost Components | 1Q14 YTD

    Fiber 31%

    Materials 15%

    Freight 15%

    Labor 12%

    Energy 11%

    Chemicals 8%

    Overhead 8%

    79

    North American mills only

  • Investor Roadshow | May 7, 2014

    2007 2008 2009 2010 2011 40

    60

    80

    100

    120

    140

    160

    180

    200

    2012 2013 2014

    Cost Indexed to January 2007 values

    U.S. OCC Delivered Cost Trend | 2% Decrease vs. 4Q13 Average Cost

    80

  • Investor Roadshow | May 7, 2014

    2014 Global Consumption | Annual Purchase Estimates for Key Inputs

    Commodity U. S. Non – U. S.

    Energy

    Natural Gas (MM BTUs) 65,000,000 11,000,000

    Fuel Oil (Barrels) 880,000 400,000

    Coal (Tons) 490,000 700,000

    Fiber Wood (Tons) 52,000,000 9,000,000

    Old Corrugated Containers / DLK (Tons) 4,500,000 430,000

    Chemicals

    Caustic Soda (Tons) 400,000 130,000

    Starch (Tons) 430,000 102,000

    Sodium Chlorate (Tons) 180,000 45,000

    LD Polyethylene (Tons) 40,000 -

    Latex (Tons) 16,000 5,000

    Does not include Asia or volume consumed by joint ventures (Sun JV, Ilim JV) Estimates are based on normal operations and may be impacted by downtime Excludes annual consumption related to Courtland operations terminated in 1Q14

    81

  • Investor Roadshow | May 7, 2014

    Investor Relations | Contact Information

    Jay Royalty • Vice President, Investor Relations

    901-419-1731

    [email protected]

    Michele Vargas • Senior Manager, Investor Relations

    901-419-7287

    [email protected]

    Betty Groom • Financial & Administrative Analyst

    901-419-4250

    [email protected]

    82


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