International Paper’s second quarter was marked by an 11% year-over-year decline in sales, missing Wall Street’s revenue expectations. Despite this, non-GAAP earnings per share significantly exceeded analyst estimates, reflecting management’s emphasis on cost reductions and operational efficiency. CEO Andrew Silvernail pointed to tangible progress on execution, including improvements in mill performance and the completion of the Riverdale machine conversion. Silvernail acknowledged the complexities of the operating environment, noting, “We’ve been clear about our focus on improved execution,” and cited ongoing cost and complexity reduction efforts as central to the quarter’s results.

Is now the time to buy IP? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From International Paper’s Q2 Earnings Call

• George Staphos (Bank of America) asked about the second-half ramp in adjusted EBITDA and the impact of diesel prices. CFO Lance Loeffler explained the ramp is expected from Riverdale’s continued ramp-up, price realization, and ongoing cost-out efforts, while diesel price assumptions are based on current market strips due to uncertainty.

• Matthew McKellar (RBC) inquired about managing Pine Hill downtime and whether insurance recoveries were included in guidance. CEO Andrew Silvernail said the network’s prior optimization mitigates the outage’s impact and that insurance is expected to cover the majority of related losses, though timing remains uncertain.

• Mark Weintraub (Seaport Research Partners) questioned the assumptions behind volume guidance and whether muted demand reflects macro trends. Silvernail explained that soft demand is mainly due to affordability issues for lower-income consumers and specific agricultural market disruptions, particularly on the West Coast.

• Philip Ng (Jefferies) pressed for clarity on the impact of price increases and the company’s pricing philosophy given current market tightness. Silvernail stated that price actions are intended to offset inflation and maintain returns, with future increases dependent on evolving supply-demand dynamics and input costs.

• Gabe Hajde (Wells Fargo Securities) sought updates on the EMEA spin and progress toward previously stated cost and commercial opportunity targets. Management confirmed ongoing action on cost savings, with about half of planned initiatives realized, while commercial gains have been largely absorbed by inflationary pressures.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the successful ramp-up and productivity gains from recent mill and facility investments, particularly Riverdale and NORPAC; (2) the realization of price increases and their effect on margin recovery across both North America and EMEA; and (3) the progress and execution of the planned EMEA business separation. We will also watch for any material changes in macroeconomic conditions or input costs that could alter the company’s profit trajectory.

International Paper currently trades at $42.36, in line with $42.64 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free).

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