vertical research partners global materials conference...

Vertical Research Partners Global Materials Conference | November 17, 2016

Vertical Research Partners Global Materials Conference

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) whether we

experience a material disruption at one of our manufacturing facilities; (vi) risks inherent in conducting

business through joint ventures; (vii) the receipt of regulatory approvals for our pending transaction to

purchase the pulp business of Weyerhaeuser Company and the successful fulfillment or waiver of all other

closing conditions without unexpected delays or conditions; (viii) the failure to realize the expected

synergies and cost-savings from the Weyerhaeuser transaction or delay in realization thereof; and (ix) 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.

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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.

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IP Investment Thesis | Long-Term Value Creation

To be among the most successful, sustainable and

responsible companies in the world

• Fiber-based Packaging, Pulp and Paper

• Advantaged positions in advantaged markets

• Strong Free Cash Flow Generation

• Value creation driving ROIC above cost of capital

• Exceed shareholders’ TSR expectations

Vision

Strategy

Shareholder Value

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Global

Economic

Recession

5

Expanded Spread of Adj. ROIC1 Above Cost of Capital | Increasing Shareholder Value

4.5%

6.3%

7.5%

6.5%

5.0%

8.1%

9.5%

8.3%

9.3% 9.2%

11.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

5-Year Average

9.5%

WACC: 8%

1 Adjusted ROIC = Adjusted Operating Earnings before Interest / Average Invested Capital [Equity (adjusted to remove pension related amounts in OCI, net of tax) +

Interest-bearing Debt]


Global Economic

Recession

$1.7$1.6

$1.8

$2.1

$1.8

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

$ B

illi

on

s

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Strong Free Cash Flow Generation

Free Cash Flow reflects cash provided by continuing operations for 2005 – 2011, based on data in the 10-K for each year at the time of filing. Free Cash Flow reflects

cash provided by operations for 2012 onward.

Excludes net cash pension contributions impacting 2006, 2010, 2011, 2013, 2014 & 2015, 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.

2014 excludes $353MM cash paid for pension plan contribution. 2015 excludes $750MM cash paid for pension plan contribution.

Transformation:

$0.5 Billion (average)

5-Year Average

$1.8 Billion


IP Investment Thesis | Leveraging Selective Choices

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Cost Positions

• Low-cost asset base

− Mill footprint on cost curve

− Disciplined capital

investment

• Sustained low-cost

positions through

operational excellence

and optimization

• Fiber-based Packaging, Pulp and Paper

• Advantaged positions in advantaged markets

Strategy

Renewable

Natural Resources

Availability and access to

low-cost, sustainable fiber

in key manufacturing

regions

Channels to Market

• Strong market positions

• Sell products in markets

where they are valued

• Winning with the right

customers and segments


Compelling Strategic Acquisition | Weyerhaeuser’s Pulp Business

Excellent Strategic Fit R

Quality Assets, People and Commercial Capabilities R

Improves Core Pulp Business R

Returns Greater than Cost of Capital R

Significant Synergies of $175 Million R

Compelling Economics and Tax Step Up R

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Weyerhaeuser & IP Mill Locations

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Weyco Market Pulp Mill

Weyco Fluff Pulp Mill

IP Fluff Pulp Mill

Converting facilities

Columbus, MS

Port Wentworth, GA

New Bern, NC

Franklin, VA

Georgetown, SC

Riegelwood, NC

Flint River, GA

Pensacola, FL

Grand Prairie, Alberta

Gdansk, Pomorskie


BuildCapability

Engaged Employees Working Safely

GrowWith the Right

Customers

OptimizeMargins

ManageCost

Aggressively

Industrial Packaging Strategy | Drive IP Success Through Value Creation

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Capital Allocation | IP’s Balanced Use of Cash

Systematically Return Cash to Shareholders

Trough-Tested Sustainable Dividend

(40% − 50% of FCF)

Opportunistic Share Repurchases

CashFrom

OperationsMaintain Strong

Balance Sheet

& Credit Rating

Appropriate Liquidity & Debt Coverage

Proactively Manage Pension Plan

Selective Reinvestment

Value-Creating, Healthy Spread

Above Cost of Capital

Improving Competitive Position

Effective Capital Spending

Maintenance & Regulatory Needs

High Return, Cost Reduction Projects

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Summary | IP Poised for Further Success

Long-term value creation driving ROIC above cost of capital

Leveraging selective choices within IP’s strategic framework

Strong FCF generation enables high-return reinvestment and

return of capital to shareholders

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