International Paper’s second quarter saw revenue growth driven by the full integration of DS Smith and price realization, but cost pressures and operational hurdles weighed on profitability. The market responded negatively to the results, as management acknowledged that cost performance in North America and EMEA was below expectations, with ongoing mill reliability issues leading to missed profit opportunities. CEO Andy Silvernail described the reliability challenges as stemming from years of underinvestment, stating, “We are hyper-focused on this area for improvement,” and emphasized the company’s efforts to address foundational operational basics.

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

While we enjoy listening to the management's commentary, our favorite part of earnings calls are 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

• Mark Adam Weintraub (Seaport Research Partners) asked about persistent mill reliability issues and why progress has lagged. CEO Andrew Silvernail explained these are longstanding problems due to underinvestment, and that improvement will require consistent reinvestment and operational focus over multiple quarters.
• George Leon Staphos (Bank of America) questioned the path to sequential profit improvement and whether North America presents more controllable opportunities than EMEA. Silvernail replied that North America is further along in its transformation, with more direct control over operational improvements, whereas EMEA’s progress is tied more to market conditions and structural changes.
• Anthony James Pettinari (Citi) inquired about July box volumes and the potential for inventory restocking in the second half. Silvernail described current demand as “pretty cautious,” with no clear signs of broad restocking, and noted that any upside would depend on increased economic activity.
• Matthew McKellar (RBC Capital Markets) asked about the flexibility to accelerate mill reinvestment while demand is soft. Silvernail confirmed the company is pushing to divert capital to strategic assets but emphasized the need for a thoughtful approach to avoid stranding non-core assets.
• Philip H. Ng (Jefferies) requested details on the quality of DS Smith’s assets, particularly mills, and how they fit into International Paper’s cost structure. Silvernail acknowledged the assets are varied in quality and stressed the importance of driving integration and prioritizing strategic, high-value assets.

Catalysts in Upcoming Quarters

In the coming quarters, our analyst team will watch closely for (1) measurable improvements in mill reliability and cost performance, (2) successful realization of anticipated commercial wins and closing the market share gap in North American packaging, and (3) tangible progress on EMEA restructuring and demand recovery. How these factors interact with ongoing macroeconomic uncertainty and tariff developments will be key signposts of International Paper’s transformation trajectory.

International Paper currently trades at $48.36, down from $53.69 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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