International Paper Company (IP) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 27, 2023 10:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning and thank you for standing by. Welcome to today's International Paper Second Quarter 2023 Earnings Call. All lines have been placed on mute to prevent background noise. After the speakers' remarks, you will have an opportunity to ask questions. [Operator Instructions]

It is now my pleasure to turn the call over to Mark Nellessen, Vice President, Investor Relations. Sir, the floor is yours.

Mark Nellessen

Thank you, Alan. Good morning, and thank you for joining International Paper's second quarter 2023 earnings call. Our speakers this morning are Mark Sutton, Chairman and Chief Executive Officer; and Tim Nicholls, Senior Vice President and Chief Financial Officer. There is important information at the beginning of our presentation on Slide 2, including certain legal disclaimers. For example, during this call we will make forward-looking statements that are subject to risks and uncertainties. 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 second quarter earnings press release and today's presentation slides.

I will now turn the call over to Mark Sutton.

Mark Sutton

Thank you, Mark, and good morning, everyone. We will begin our discussion on Slide 3 where I will highlight our results. In the second quarter, our operations ran very well and managed our businesses effectively in a challenging demand environment while taking care of our customers. Looking at our performance, International Paper delivered $55 million of year-over-year incremental earnings benefit from our Building a Better IP initiatives. This program contributed $120 million of benefits through the first half of the year, and we are on track to exceed our full year target for the second year in a row.

Underlying demand for our products improved throughout the quarter, but remain constrained by inventory destocking as our customers and broader supply chain work through elevated inventories of their products. Based on discussions with our customers and trends observed across the various end-use segments for packaging and pulp products, we believe consumer priority in the second quarter remain focused on services as well as non-discretionary goods. This trend has been influenced by a pull forward of goods during the pandemic as well as inflationary pressures and rising interest rates. However, based on feedback from our customers, we also believe that destocking is finally coming to the close.