INTERNATIONAL PAPER CO /NEW/ 10-Q

MD&A

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in "Financial Statements and Supplementary Data" of this Quarterly Report on Form 10-Q (this "Form 10-Q") and the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (our "Annual Report"). In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and in our Annual Report and subsequent quarterly reports, particularly under "Risk Factors" and "Forward-Looking Statements" of this Form 10-Q. Please see our "Cautionary Statement Regarding Forward-Looking Statements" below. EXECUTIVE SUMMARY Second Quarter 2026 Financial Summary • Net sales of $6 billion • Loss from continuing operations of $12 million • Adjusted EBITDA (non-GAAP) from continuing operations of $587 million (1) • Cash provided by operating activities of $1.14 billion (2) • Free cash flow (non-GAAP) of $87 million (1) (2) (1) See " Non-GAAP Financial Measures " for a list of our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures. (2) Reflects amounts for the six months ended June 30, 2026, rather than the second quarter. Overview The Company’s second quarter results reflect continued progress against the strategic priorities of improving execution, enhancing reliability, optimizing the cost structure, and investing in our most competitive assets. Operational performance improved across the enterprise despite a significant planned maintenance outage schedule in North America and a challenging demand environment in portions of Europe. In North America, adjusted EBITDA was sequentially lower, but better than expected as the Company continued to benefit from commercial initiatives focused on customer engagement and market share growth. Sales volumes were higher, reflecting continued strength in