MEMPHIS,
Tenn., April 25, 2024 /PRNewswire/
-- International Paper (NYSE: IP) today reported first quarter
2024 financial results.
FIRST QUARTER 2024 HIGHLIGHTS
- First quarter net earnings of $56
million ($0.16 per diluted
share)
- First quarter adjusted operating earnings (non-GAAP) of
$61 million ($0.17 per diluted share)
- First quarter results negatively impacted by approximately
$52 million (pre-tax) due to January
freeze and Ixtac, Mexico
fire
- First quarter cash provided by operations of $395 million and returned $161 million to shareholders in
dividends
"International Paper made progress executing our strategic
initiatives in the first quarter,'' said Mark Sutton, Chairman and Chief Executive
Officer. "We saw commercial benefits from our business strategies,
as well as cost benefits from mill system optimization. Although
costs remain elevated and volumes were seasonally lower in the
quarter, market trends continue to improve."
"Looking ahead," Sutton added, "International Paper is well
positioned for its next chapter as Andy
Silvernail steps into the CEO role on May 1. I am confident that his leadership
experience and proven track record, paired with the industry
expertise of our senior leadership team, will amplify the company's
success going forward. On a personal note, it has been a privilege
to be part of the IP team for the past 40 years and an honor to
lead the company for the past decade."
Diluted Net EPS and
Adjusted Operating EPS
|
|
|
|
|
|
First
Quarter
2024
|
|
Fourth
Quarter
2023
|
|
First
Quarter
2023
|
|
Net Earnings
(Loss)
|
|
$
0.16
|
|
$
(0.82)
|
|
$
0.49
|
|
Less – Discontinued
Operations (Gain) Loss, Net of Taxes
|
|
—
|
|
—
|
|
—
|
|
Net Earnings (Loss)
from Continuing Operations
|
|
0.16
|
|
(0.82)
|
|
0.49
|
|
Add Back –
Non-Operating Pension Expense (Income)
|
|
(0.04)
|
|
0.04
|
|
0.04
|
|
Add Back – Net Special
Items Expense (Income)
|
|
0.05
|
|
1.58
|
|
0.01
|
|
Income Taxes -
Non-Operating Pension and Special Items
|
|
—
|
|
(0.39)
|
|
(0.01)
|
|
Adjusted Operating
Earnings*
|
|
$
0.17
|
|
$
0.41
|
|
$
0.53
|
|
*
|
Adjusted operating
earnings (non-GAAP) is defined as net earnings (loss) (GAAP)
excluding discontinued operations, net special items and
non-operating pension expense (income). Management uses this
measure to focus on on-going operations, and believes that it is
useful to investors because it enables them to perform meaningful
comparisons of past and present consolidated operating results from
continuing operations. For discussion of discontinued operations,
net special items and non-operating pension expense (income), see
the disclosure under Effects of Net Special Items, Discontinued
Operations, Net of Taxes and Consolidated Statement of Operations
and related notes included later in this release. A reconciliation
of net earnings (loss) to adjusted operating earnings is included
later in this release.
|
Select Financial
Measures
|
|
|
|
(In
millions)
|
|
First
Quarter
2024
|
|
Fourth
Quarter
2023
|
|
First
Quarter
2023
|
|
Net Sales
|
|
$
4,619
|
|
$
4,601
|
|
$
5,020
|
|
Net Earnings
(Loss)
|
|
56
|
|
(284)
|
|
172
|
|
Business Segment
Operating Profit (Loss)
|
|
169
|
|
257
|
|
306
|
|
Adjusted
Operating Earnings
|
|
61
|
|
142
|
|
185
|
|
Cash Provided By (Used
For) Operations
|
|
395
|
|
492
|
|
345
|
|
Free Cash
Flow**
|
|
144
|
|
187
|
|
4
|
|
**
|
Free cash flow is a
non-GAAP financial measure. The most directly comparable GAAP
measure is cash provided by (used for) operations. A reconciliation
of cash provided by (used for) operations to free cash flow and an
explanation of why we believe that free cash flow provides useful
information to investors, is included later in this
release.
|
SEGMENT INFORMATION
Business segment operating profits
are used by International Paper's management to measure the
earnings performance of the Company's businesses and are calculated
as set forth in footnote (e) below under "Sales and Earnings by
Business Segment". First quarter 2024 net sales by business segment
and operating profit (loss) by business segment compared with the
fourth quarter of 2023 and the first quarter of 2023 are as
follows:
Business Segment
Results
|
|
|
|
(In
millions)
|
|
First
Quarter
2024
|
|
Fourth
Quarter
2023
|
|
First
Quarter
2023
|
|
Net Sales by
Business Segment
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
3,808
|
|
$
3,842
|
|
$
4,083
|
|
Global Cellulose
Fibers
|
|
704
|
|
656
|
|
811
|
|
Corporate and
Inter-segment Sales
|
|
107
|
|
103
|
|
126
|
|
Net
Sales
|
|
$
4,619
|
|
$
4,601
|
|
$
5,020
|
|
Operating Profit
(Loss) by Business Segment
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
216
|
|
$
315
|
|
$
322
|
|
Global Cellulose
Fibers
|
|
(47)
|
|
(58)
|
|
(16)
|
|
Total Business
Segment Operating Profit (Loss)
|
|
$
169
|
|
$
257
|
|
$
306
|
|
Industrial Packaging operating profits (losses) in
the first quarter of 2024 were $216
million compared with $315
million in the fourth quarter of 2023. In North America, earnings benefited from higher
sales prices for boxes reflecting the benefits of our commercial
efforts and higher sales prices for containerboard. These benefits
were more than offset by seasonally lower volumes, higher planned
outage costs and higher input costs, primarily for recovered fiber.
Additionally, operating costs were higher including the impact of
the winter freeze and Ixtac, Mexico fire. Economic downtime was lower,
reflecting the impact of mill strategic actions taken in the fourth
quarter of 2023. In EMEA, earnings were lower, as the benefits of
lower operating costs and lower planned maintenance outage costs
were more than offset by the non-repeat of an energy subsidy and
other favorable one-time items in the fourth quarter of
2023.
Global Cellulose Fibers operating profits (losses) in the
first quarter of 2024 were $(47)
million compared with $(58)
million in the fourth quarter of 2023. Regional demand for
absorbent fluff products is improving in mature economies while
demand is generally stable in the developing economies. Higher pulp
pricing, improved product mix and lower planned outage costs were
partially offset by higher operating costs. Economic downtime was
lower, reflecting the impact of the mill strategic actions taken in
the second half of 2023. Input costs were higher, primarily for
energy.
CORPORATE EXPENSES
Corporate expenses, net was expense
of $24 million fdor the first quarter
of 2024 compared with a net benefit of $9
million in the fourth quarter of 2023.
EFFECTS OF SPECIAL ITEMS
Net special items in the
first quarter of 2024 amount to a net after-tax charge of
$14 million ($0.04 per diluted
share) compared with a charge of $415
million ($1.20 per diluted
share) in the fourth quarter of 2023 and a charge of $2 million ($0.01
per diluted share) in the first quarter of 2023. Net special items
in all periods include the following charges (gains):
|
|
First Quarter
2024
|
|
Fourth Quarter
2023
|
|
First Quarter
2023
|
(In
millions)
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
Restructuring and
other charges, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other
costs (a)
|
|
$
3
|
|
$
2
|
|
$
118
|
|
$
89
|
|
$
—
|
|
$
—
|
Building a Better
IP
|
|
—
|
|
—
|
|
(19)
|
|
(14)
|
|
—
|
|
—
|
Total restructuring
and other charges, net
|
|
3
|
|
2
|
|
99
|
|
75
|
|
—
|
|
—
|
Accelerated
depreciation (a)
|
|
5
|
|
4
|
|
422
|
|
317
|
|
—
|
|
—
|
Legal reserve
adjustments
|
|
10
|
|
7
|
|
—
|
|
—
|
|
—
|
|
—
|
Net loss on
miscellaneous land sales
|
|
5
|
|
4
|
|
—
|
|
—
|
|
—
|
|
—
|
DS Smith combination
costs
|
|
5
|
|
4
|
|
—
|
|
—
|
|
—
|
|
—
|
Equity method
investment impairment
|
|
—
|
|
—
|
|
18
|
|
14
|
|
—
|
|
—
|
Environmental
remediation reserve adjustment
|
|
—
|
|
—
|
|
7
|
|
5
|
|
—
|
|
—
|
Interest related to the
timber monetization settlement
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
|
2
|
Interest related to
settlement of tax audits
|
|
(10)
|
|
(7)
|
|
—
|
|
—
|
|
—
|
|
—
|
Tax expense related to
legal entity restructuring
|
|
—
|
|
—
|
|
—
|
|
4
|
|
—
|
|
—
|
Total special
items, net
|
|
$
18
|
|
$
14
|
|
$
546
|
|
$
415
|
|
$
3
|
|
$
2
|
(a)
|
Amounts associated with
mill strategic actions. See notes (c) and (d) on the Consolidated
Statement of Operations included later in this release.
|
ANNOUNCED ACQUISITION
On April
16, 2024, the Company issued an announcement pursuant to
Rule 2.7 of the City Code on Takeovers and Mergers, disclosing the
terms of a recommended offer by the Company to acquire the entire
issued and to be issued share capital of DS Smith Plc, a public
limited company incorporated in England and Wales ("DS Smith"), in an all-stock
transaction (the "Business Combination"). Under the terms of the
Business Combination, each DS Smith share will be valued at
415 pence per share based on the
Company's closing share price of $40.85 and GBP/USD exchange rate of 1.2645 on
March 25, 2024, being the close of
business on the last day prior to the announcement by DS Smith of a
previously disclosed possible offer by the Company. This will
result in IP issuing 0.1285 shares for each DS Smith share,
resulting in pro forma ownership of 66.3% for IP shareholders and
33.7% for DS Smith shareholders, with an implied enterprise value
of approximately $9.9 billion. Costs
related to the transaction were $5
million for the three months ended March 31, 2024. In connection with the Business
Combination, the Company also intends to seek a secondary listing
of the International Paper common stock ("Common Stock") on the
London Stock Exchange. Following completion of the Business
Combination, Memphis, Tennessee
will be the headquarters of the combined company, with plans to
establish a Europe, Middle East and Africa (EMEA) headquarters at DS Smith's
existing London headquarters. Upon
the closing of the Business Combination, it is intended that the
Company's board of directors will form the board of directors of
the combined company, and that up to two directors of DS Smith will
be invited to join the board of directors of the combined company.
Mr. Andrew K. Silvernail will be the
Chief Executive Officer of the combined company. The transaction is
expected to close during the fourth quarter of 2024, subject to the
approval of IP shareholders and DS Smith shareholders, as well as
customary closing conditions, including regulatory clearances in
Europe and the U.S.
EARNINGS WEBCAST
The company will host a webcast
today to discuss earnings and current market conditions, beginning
at 10 a.m. ET (9 a.m. CT). All interested parties are invited to
listen to the webcast via the company's website by clicking on the
Investors tab and going to the Events & Presentations page at
https://www.internationalpaper.com/investors/events-presentations.
A replay of the webcast will also be on the website beginning
approximately two hours after the call.
Parties who wish to participate in the webcast via
teleconference may dial +1 (234) 720-6985 or, within the U.S. only,
(877) 336-4437, and ask to be connected to the International Paper
first quarter earnings call. The conference ID number is 4423602.
Participants should call in no later than 9:45 a.m. ET (8:45 a.m.
CT). An audio-only replay will be available for ninety days
following the call. To access the replay, dial +1 (402) 970-0847
or, within the U.S. only, (866) 207-1041 and when prompted for the
conference ID, enter 6943268.
About International Paper
International Paper
(NYSE: IP) is a global producer of sustainable packaging, pulp and
other fiber-based products, and one of the world's largest
recyclers. Headquartered in Memphis,
Tenn., we employ approximately 39,000 colleagues globally
who are committed to creating what's next. We serve customers
worldwide, with manufacturing operations in North America, Latin
America, North Africa and
Europe. Net sales for 2023 were
$18.9 billion. Additional information
can be found by visiting internationalpaper.com.
Visit https://www.internationalpaper.com/investors for more
information regarding International Paper, including a slide
presentation regarding the first quarter 2024. We use this website
as a primary channel for disclosing key information to our
investors, some of which may contain material and previously
non-public information.
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this press release that are not historical
in nature may be considered "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by the use of
forward-looking or conditional words such as "expects,"
"anticipates," "believes," "estimates," "could," "should," "can,"
"forecast," "intend," "look," "may," "will," "remain," "confident,"
"commit" and "plan" or similar expressions. These statements are
not guarantees of future performance and reflect management's
current views and speak only as to the dates the statements are
made and are subject to risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
in these statements. All statements, other than statements of
historical fact, are forward-looking statements, including, but not
limited to, statements regarding anticipated financial results,
economic conditions, industry trends, future prospects and the
execution and consummation of corporate transactions or
contemplated acquisitions, including our proposed business
combination with DS Smith Plc. Factors which could cause actual
results to differ include but are not limited to: (i) our ability
to consummate and achieve the benefits expected from, and other
risks associated with, acquisitions, joint ventures, divestitures,
spinoffs, capital investments and other corporate transactions,
including, but not limited to, our proposed business combination
with DS Smith Plc and our ability to integrate and implement our
plans, forecasts, and other expectations with respect to the
combined company; (ii) uncertainty as to whether or when the
business combination may be completed, if at all; (iii) risks with
respect to climate change and global, regional, and local weather
conditions, as well as risks related to our targets and goals with
respect to climate change and the emission of greenhouse gases and
other environmental, social and governance matters, including our
ability to meet such targets and goals; (iv) the level of our
indebtedness, risks associated with our variable rate debt, and
changes in interest rates (including the impact of current elevated
interest rate levels); (v) the impact of global and domestic
economic conditions and industry conditions, including with respect
to current negative macroeconomic conditions, inflationary
pressures and changes in the cost or availability of raw materials,
energy sources and transportation sources, supply chain shortages
and disruptions, competition we face, cyclicality and changes in
consumer preferences, demand and pricing for our products, and
conditions impacting the credit, capital and financial markets;
(vi) risks arising from conducting business internationally,
domestic and global geopolitical conditions, military conflict
(including the Russia/Ukraine conflict, the conflict in the
Middle East, the possible
expansion of such conflicts, and the potential geopolitical and
economic consequences associated therewith), changes in currency
exchange rates, trade protectionist policies, downgrades in our
credit ratings, and/or the credit ratings of banks issuing certain
letters of credit, issued by recognized credit rating
organizations; (vii) the amount of our future pension funding
obligations, and pension and healthcare costs; (viii) the costs of
compliance, or the failure to comply with, existing and new
environmental (including with respect to climate change and GHG
emissions), tax, labor and employment, privacy, anti-bribery and
anti-corruption, and other U.S. and non-U.S. governmental laws and
regulations; (ix) any material disruption at any of our
manufacturing facilities or other adverse impact on our operations
due to severe weather, natural disasters, climate change or other
causes; (x) our ability to realize expected benefits and cost
savings associated with restructuring initiatives; (xi)
cybersecurity and information technology risks, including as a
result of security breaches and cybersecurity incidents; (xii) loss
contingencies and pending, threatened or future litigation,
including with respect to environmental related matters; (xiii) our
exposure to claims under our agreements with Sylvamo Corporation;
(xiv) our failure to realize the anticipated benefits of the
spin-off of Sylvamo Corporation and the qualification of such
spin-off as a tax-free transaction for U.S. federal income tax
purposes; and (xv) our ability to attract and retain qualified
personnel, particularly in light of current labor market
conditions. These and other factors that could cause or contribute
to actual results differing materially from such forward-looking
statements can be found in our press releases and reports filed
with the U.S. Securities and Exchange Commission. In addition,
other risks and uncertainties not presently known to the Company or
that we currently believe to be immaterial could affect the
accuracy of any forward-looking statements. The Company undertakes
no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
Additional Information
This release may be deemed to be solicitation material in
respect of the proposed business combination with DS Smith Plc (the
"Business Combination"), including the issuance of new shares of
Company Common Stock in connection with the Business Combination
(the "Share Issuance"). In connection with the proposed Share
Issuance, International Paper expects to file a proxy statement on
Schedule 14A, including any amendments and supplements thereto (the
"Proxy Statement") with the United States Securities and Exchange
Commission (the "SEC"). To the extent International Paper effects
the Business Combination as a scheme of arrangement under the laws
of the United Kingdom, the Share
Issuance would not be expected to require registration under the
U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), pursuant
to an exemption provided by Section 3(a)(10) under the Securities
Act. In the event that International Paper determines to conduct
the Business Combination pursuant to an offer or otherwise in a
manner that is not exempt from the registration requirements of the
Securities Act, it will file a registration statement with the SEC
containing a prospectus with respect to the Share Issuance.
INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT,
THE SCHEME DOCUMENT, AND OTHER RELEVANT DOCUMENTS FILED OR TO BE
FILED WITH THE SEC OR INCORPORATED BY REFERENCE IN THE PROXY
STATEMENT (IF ANY) CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT INTERNATIONAL PAPER,
THE BUSINESS COMBINATION AND RELATED MATTERS. Investors and
stockholders will be able to obtain free copies of the Proxy
Statement, the scheme document, and other documents filed by
International Paper with the SEC at the SEC's website at
http://www.sec.gov. In addition, investors and stockholders will be
able to obtain free copies of the Proxy Statement, the scheme
document, and other documents filed by International Paper with the
SEC at https://www.internationalpaper.com/investors.
Participants in the Solicitation
International Paper and its directors, officers and employees,
including Christopher M. Connor,
Ahmet C. Dorduncu, Ilene S. Gordon,
Anders Gustafsson, Jacqueline C. Hinman, Clinton A. Lewis, Jr., Kathryn D. Sullivan, Anton V. Vincent and Ray
G. Young, all of whom are members of International Paper's
board of directors, as well as Mark S.
Sutton, Chief Executive Officer and Chairman of
International Paper's board of directors, and Timothy S. Nicholls, Senior Vice President and
Chief Financial Officer, may be deemed participants in the
solicitation of proxies from International Paper's stockholders in
respect of the Business Combination, including the proposed Share
Issuance. Information regarding International Paper's directors and
executive officers is contained in (i) the "Directors, Executive
Officers and Corporate Governance," "Executive Compensation" and
"Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters" sections of the Annual Report on Form
10-K for the fiscal year ended December 31,
2023 of International Paper, which was filed with the SEC on
February 16, 2024 and (ii) the "Item
1 – Election of 9 Directors," "Compensation Discussion &
Analysis (CD&A)," and "Security Ownership of Management"
sections in the definitive proxy statement for the 2024 on Schedule
14A annual meeting of stockholders of International Paper, which
was filed with the SEC on April 2,
2024. Additional information regarding the identity of
potential participants, and their direct or indirect interests, by
security holdings or otherwise, will be set forth in the Proxy
Statement relating to the Business Combination when it is filed
with the SEC. These documents may be obtained free of charge from
the SEC's website at www.sec.gov and the Company's website at
https://www.internationalpaper.com/investors.
INTERNATIONAL PAPER
COMPANY Consolidated
Statement of Operations Preliminary and Unaudited (In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Three Months
Ended
December 31,
|
|
|
|
|
2024
|
|
2023
|
|
2023
|
|
|
Net
Sales
|
|
$
4,619
|
|
$
5,020
|
|
$
4,601
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
3,424
|
(a)
|
3,642
|
|
3,282
|
(a)
|
|
Selling and
administrative expenses
|
|
358
|
(b)
|
381
|
|
357
|
|
|
Depreciation,
amortization and cost of timber harvested
|
|
278
|
(c)
|
241
|
|
689
|
(c)
|
|
Distribution
expenses
|
|
391
|
|
422
|
|
395
|
|
|
Taxes other than
payroll and income taxes
|
|
41
|
|
36
|
|
39
|
|
|
Restructuring and other
charges, net
|
|
3
|
(d)
|
—
|
|
99
|
(d)
|
|
Net (gains) losses on
sales of fixed assets
|
|
5
|
(e)
|
—
|
|
—
|
|
|
Interest expense,
net
|
|
46
|
(f)
|
62
|
(f)
|
52
|
|
|
Non-operating pension
expense (income)
|
|
(12)
|
|
15
|
|
14
|
|
|
Earnings (Loss) From
Continuing Operations Before Income Taxes and Equity Earnings
(Loss)
|
|
85
|
|
221
|
|
(326)
|
|
|
Income tax provision
(benefit)
|
|
27
|
|
48
|
|
(61)
|
(h)
|
|
Equity earnings (loss),
net of taxes
|
|
(2)
|
|
(1)
|
|
(19)
|
(i)
|
|
Earnings (Loss) From
Continuing Operations
|
|
56
|
|
172
|
|
(284)
|
|
|
Discontinued
operations, net of taxes
|
|
—
|
|
—
|
(g)
|
—
|
|
|
Net Earnings
(Loss)
|
|
$
56
|
|
$
172
|
|
$
(284)
|
|
|
Basic Earnings Per
Common Share
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
$
0.16
|
|
$
0.49
|
|
$
(0.82)
|
|
|
Discontinued
operations, net of taxes
|
|
—
|
|
—
|
|
—
|
|
|
Net earnings
(loss)
|
|
$
0.16
|
|
$
0.49
|
|
$
(0.82)
|
|
|
Diluted Earnings Per
Common Share
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
$
0.16
|
|
$
0.49
|
|
$
(0.82)
|
|
|
Discontinued
operations, net of taxes
|
|
—
|
|
—
|
|
—
|
|
|
Net earnings
(loss)
|
|
$
0.16
|
|
$
0.49
|
|
$
(0.82)
|
|
|
Average Shares of
Common Stock Outstanding - Diluted
|
|
348.5
|
|
353.3
|
|
346.0
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of this Consolidated Statement of
Operations.
|
(a)
|
Includes a pre-tax
charge of $10 million ($7 million after taxes) for the three months
ended March 31, 2024 for a litigation reserve and a pre-tax charge
of $7 million ($5 million after taxes) for the three months ended
December 31, 2023 for environmental reserve adjustments.
|
(b)
|
Includes a pre-tax
charge of $5 million ($4 million after taxes) for the three months
ended March 31, 2024 for costs associated with our announced
agreement of an all-share combination with DS Smith Plc.
|
(c)
|
Includes a pre-tax
charge of $5 million ($4 million after taxes) and $422 million
($317 million after taxes) for the three months ended March 31,
2024 and December 31, 2023, respectively, for accelerated
depreciation associated with the permanent closure of our
containerboard mill in Orange, Texas and the permanent shutdown of
pulp machines at our Riegelwood, North Carolina and Pensacola,
Florida mills.
|
(d)
|
Includes a pre-tax
charge of $3 million ($2 million after taxes) and $118 million ($89
million after taxes) for the three months ended March 31, 2024 and
December 31, 2023, respectively, for costs associated with the
permanent closure of our containerboard mill in Orange, Texas and
the permanent shutdown of pulp machines at our Riegelwood, North
Carolina and Pensacola, Florida mills and pre-tax income of $19
million ($14 million after taxes) for the three months ended
December 31, 2023 for the revision of severance estimates related
to our Building a Better IP initiative.
|
(e)
|
Includes a pre-tax net
loss of $5 million ($4 million after taxes) for the three months
ended March 31, 2024 related to miscellaneous land
sales.
|
(f)
|
Includes pre-tax income
of $10 million ($7 million after taxes) for the three months ended
March 31, 2024 for interest income associated with the settlement
of tax audits and a pre-tax charge of $3 million ($2 million after
taxes) for the three months ended March 31, 2023 related to the
previously announced settlement of the timber monetization
restructuring tax matter.
|
(g)
|
Includes a charge of
$43 million (before and after taxes) for the three months ended
March 31, 2023 for the impairment of our former equity method
investment in the Ilim joint venture.
|
(h)
|
Includes tax expense of
$4 million for the three months ended December 31, 2023 related to
internal legal entity restructuring.
|
(i)
|
Includes a pre-tax
charge of $18 million ($14 million after taxes) for the three
months ended December 31, 2023 for the other-than-temporary
impairment of an equity method investment.
|
|
INTERNATIONAL PAPER
COMPANY Reconciliation
of Net Earnings (Loss) to Adjusted Operating
Earnings Preliminary and
Unaudited (In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Three Months
Ended
December 31,
|
|
|
|
|
2024
|
|
2023
|
|
2023
|
|
|
Net Earnings
(Loss)
|
|
$
56
|
|
$
172
|
|
$
(284)
|
|
|
Less: Discontinued
operations, net of taxes (gain) loss
|
|
—
|
|
—
|
|
—
|
|
|
Earnings (Loss) from
Continuing Operations
|
|
56
|
|
172
|
|
(284)
|
|
|
Add back: Non-operating
pension expense (income)
|
|
(12)
|
|
15
|
|
14
|
|
|
Add back: Net special
items expense (income)
|
|
18
|
|
3
|
|
546
|
|
|
Income taxes -
Non-operating pension and special items
|
|
(1)
|
|
(5)
|
|
(134)
|
|
|
Adjusted Operating
Earnings
|
|
$
61
|
|
$
185
|
|
$
142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Three Months
Ended
December 31,
|
|
|
|
|
2024
|
|
2023
|
|
2023
|
|
|
Diluted Earnings per
Common Share as Reported
|
|
$
0.16
|
|
$
0.49
|
|
$
(0.82)
|
|
|
Less: Discontinued
operations, net of taxes (gain) loss
|
|
—
|
|
—
|
|
—
|
|
|
Continuing
Operations
|
|
0.16
|
|
0.49
|
|
(0.82)
|
|
|
Add back: Non-operating
pension expense (income)
|
|
(0.04)
|
|
0.04
|
|
0.04
|
|
|
Add back: Net special
items expense (income)
|
|
0.05
|
|
0.01
|
|
1.58
|
|
|
Income taxes per share
- Non-operating pension and special items
|
|
—
|
|
(0.01)
|
|
(0.39)
|
|
|
Adjusted Operating
Earnings per Share
|
|
$
0.17
|
|
$
0.53
|
|
$
0.41
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Earnings is a non-GAAP measure. Net earnings (loss) is the most
directly comparable GAAP measure. The Company calculates Adjusted
Operating Earnings (non-GAAP) by excluding the after-tax effect of
discontinued operations, non-operating pension expense (income) and
items considered by management to be unusual or otherwise not
reflective of on-going operations (net special items) as reflected
in the Consolidated Statement of Operations and related notes
included in this release from the earnings reported under U.S.
GAAP. Management uses this measure to focus on on-going operations,
and believes that it is useful to investors because it enables them
to perform meaningful comparisons of past and present consolidated
operating results from continuing operations. The Company believes
that using this information, along with net earnings, provides for
a more complete analysis of the results of operations by
quarter.
|
INTERNATIONAL PAPER
COMPANY
Sales and Earnings by Business
Segment Preliminary and
Unaudited
(In millions)
|
|
|
|
|
|
|
|
|
|
|
Net Sales by
Business Segment
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Three Months
Ended
December 31,
|
|
|
|
|
2024
|
|
2023
|
|
2023
|
|
|
Industrial
Packaging
|
|
$
3,808
|
|
$
4,083
|
|
$
3,842
|
|
|
Global Cellulose
Fibers
|
|
704
|
|
811
|
|
656
|
|
|
Corporate and
Inter-segment Sales
|
|
107
|
|
126
|
|
103
|
|
|
Net
Sales
|
|
$
4,619
|
|
$
5,020
|
|
$
4,601
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
(Loss) by Business Segment
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Three Months
Ended
December 31,
|
|
|
|
|
2024
|
|
2023
|
|
2023
|
|
|
Industrial
Packaging
|
|
$
216
|
|
$
322
|
|
$
315
|
|
|
Global Cellulose
Fibers
|
|
(47)
|
|
(16)
|
|
(58)
|
|
|
Total Business
Segment Operating Profit (Loss)
|
|
$
169
|
|
$
306
|
|
$
257
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) From
Continuing Operations Before Income Taxes and Equity
Earnings
|
|
85
|
|
221
|
|
(326)
|
|
|
Interest expense,
net
|
|
46
|
(a)
|
62
|
(a)
|
52
|
|
|
Adjustment for less
than wholly owned subsidiaries (d)
|
|
(2)
|
|
—
|
|
(2)
|
|
|
Corporate expenses,
net
|
|
24
|
|
8
|
|
(9)
|
|
|
Corporate net special
items
|
|
20
|
(b)
|
—
|
|
(1)
|
(b)
|
|
Business net special
items
|
|
8
|
(c)
|
—
|
|
529
|
(c)
|
|
Non-operating pension
expense (income)
|
|
(12)
|
|
15
|
|
14
|
|
|
Business Segment
Operating Profit (Loss) (e)
|
|
$
169
|
|
$
306
|
|
$
257
|
|
(a)
|
Includes income of $10
million for the three months ended March 31, 2024 for interest
income associated with the settlement of tax audits and a charge of
$3 million for the three months ended March 31, 2023 related to the
previously announced settlement of the timber monetization
restructuring tax matter.
|
(b)
|
Includes a charge of
$10 million for the three months ended March 31, 2024 for a
litigation reserve, a net loss of $5 million for the three months
ended March 31, 2024 related to miscellaneous land sales, a charge
of $5 million for the three months ended March 31, 2024 for costs
associated with our announced agreement of an all-share combination
with DS Smith Plc, a charge of $7 million for the three months
ended December 31, 2023 for environmental reserve adjustments and
income of $8 million for the three months ended December 31, 2023
for the revision of severance estimates related to our Building a
Better IP initiative.
|
(c)
|
Related to Industrial
Packaging, includes charges of $4 million and $428 million for the
three months ended March 31, 2024 and December 31, 2023,
respectively, for accelerated depreciation, severance and other
costs associated with the permanent closure of our containerboard
mill in Orange, Texas and income of $8 million for the three months
ended December 31, 2023 for the revision of severance estimates
related to our Building a Better IP initiative.
|
|
Related to Global
Cellulose Fibers, includes charges of $4 million and $112 million
for the three months ended March 31, 2024 and December 31, 2023,
respectively, for accelerated depreciation, severance and other
costs associated with the permanent shutdown of pulp machines at
our Riegelwood, North Carolina and Pensacola, Florida mills
and income of $3 million for the three months ended December 31,
2023 for the revision of severance estimates related to our
Building a Better IP initiative.
|
(d)
|
Operating profits for
business segments include each segment's percentage share of the
profits of subsidiaries included in that segment that are less than
wholly owned. The pre-tax earnings for these subsidiaries is
adjusted here to present consolidated earnings before income taxes
and equity earnings.
|
(e)
|
Total business segment
operating profit (loss) is a non-GAAP measure and the most directly
comparable GAAP measure is net earnings from continuing operations.
As set forth in the chart above, business segment operating profit
is defined as earnings (loss) from continuing operations before
income taxes and equity earnings, but including the impact of less
than wholly owned subsidiaries, and excluding interest expense,
net, corporate expenses, net, corporate net special items, business
net special items and non-operating pension expense. Business
segment operating profit is a measure reported to our management
for purposes of making decisions about allocating resources to our
business segments and assessing the performance of our business
segments. Management uses this measure to focus on on-going
operations, and believes that it is useful to investors because it
enables them to perform meaningful comparisons of past and present
operating results. Management believes that using this information,
along with net earnings from continuing operations, provides a more
complete analysis of the results of the operations by quarter.
Business segment operating profit is presented in our financial
statement footnotes in accordance with ASC 280.
|
INTERNATIONAL PAPER
COMPANY Sales Volume by
Product (a) Preliminary and
Unaudited
|
|
International Paper
Consolidated
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Three Months
Ended
December 31,
|
|
|
|
2024
|
|
2023
|
|
2023
|
|
|
Industrial Packaging
(In thousands of short tons)
|
|
|
|
|
|
|
|
Corrugated Packaging
(b)
|
2,232
|
|
2,381
|
|
2,325
|
|
|
Containerboard
|
739
|
|
544
|
|
783
|
|
|
Recycling
|
575
|
|
560
|
|
535
|
|
|
Saturated
Kraft
|
47
|
|
34
|
|
42
|
|
|
Gypsum /Release
Kraft
|
58
|
|
60
|
|
58
|
|
|
EMEA Packaging
(b)
|
340
|
|
335
|
|
331
|
|
|
Industrial Packaging
|
3,991
|
|
3,914
|
|
4,074
|
|
|
Global Cellulose Fibers
(In thousands of metric tons) (c)
|
729
|
|
688
|
|
676
|
|
|
|
|
|
|
|
|
|
(a)
|
Sales volumes include
third party and inter-segment sales and exclude sales of equity
investees.
|
(b)
|
Volumes for corrugated
box sales reflect consumed tons sold ("CTS"). Board sales by these
businesses reflect invoiced tons.
|
(c)
|
Includes North American
volumes and internal sales to mills.
|
INTERNATIONAL PAPER
COMPANY Consolidated
Balance Sheet Preliminary
and Unaudited (In
millions)
|
|
|
March 31,
2024
|
|
December 31,
2023
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and Temporary
Investments
|
|
$
1,070
|
|
$
1,113
|
Accounts and Notes
Receivable, Net
|
|
3,048
|
|
3,059
|
Contract
Assets
|
|
430
|
|
433
|
Inventories
|
|
1,771
|
|
1,889
|
Other
|
|
140
|
|
114
|
Total Current
Assets
|
|
6,459
|
|
6,608
|
Plants, Properties and
Equipment, Net
|
|
10,027
|
|
10,150
|
Investments
|
|
160
|
|
163
|
Long-Term Financial
Assets of Variable Interest Entities
|
|
2,317
|
|
2,312
|
Goodwill
|
|
3,041
|
|
3,041
|
Overfunded Pension Plan
Assets
|
|
145
|
|
118
|
Right of Use
Assets
|
|
445
|
|
448
|
Deferred Charges and
Other Assets
|
|
434
|
|
421
|
Total
Assets
|
|
$
23,028
|
|
$
23,261
|
Liabilities and
Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Notes Payable and
Current Maturities of Long-Term Debt
|
|
138
|
|
138
|
Accounts Payable and
Other Current Liabilities
|
|
3,716
|
|
3,821
|
Total Current
Liabilities
|
|
3,854
|
|
3,959
|
Long-Term
Debt
|
|
5,453
|
|
5,455
|
Long-Term Nonrecourse
Financial Liabilities of Variable Interest Entities
|
|
2,115
|
|
2,113
|
Deferred Income
Taxes
|
|
1,541
|
|
1,552
|
Underfunded Pension
Benefit Obligation
|
|
279
|
|
280
|
Postretirement and
Postemployment Benefit Obligation
|
|
137
|
|
140
|
Long-Term Lease
Obligations
|
|
307
|
|
312
|
Other
Liabilities
|
|
1,085
|
|
1,095
|
Equity
|
|
|
|
|
Common Stock
|
|
449
|
|
449
|
Paid-in
Capital
|
|
4,663
|
|
4,730
|
Retained
Earnings
|
|
9,386
|
|
9,491
|
Accumulated Other
Comprehensive Loss
|
|
(1,558)
|
|
(1,565)
|
|
|
12,940
|
|
13,105
|
Less: Common Stock Held
in Treasury, at Cost
|
|
4,683
|
|
4,750
|
Total Equity
|
|
8,257
|
|
8,355
|
Total Liabilities
and Equity
|
|
$
23,028
|
|
$
23,261
|
INTERNATIONAL PAPER
COMPANY Consolidated
Statement of Cash Flows Preliminary and Unaudited (In millions)
|
|
|
Three Months Ended
March 31,
|
|
|
2024
|
|
2023
|
Operating
Activities
|
|
|
|
|
Net earnings
(loss)
|
|
$
56
|
|
$
172
|
Depreciation,
amortization and cost of timber harvested
|
|
278
|
|
241
|
Deferred income tax
expense (benefit), net
|
|
(11)
|
|
(2)
|
Restructuring and other
charges, net
|
|
3
|
|
—
|
Periodic pension
(income) expense, net
|
|
(2)
|
|
26
|
Net (gains) losses on
sales and impairments of equity method investments
|
|
—
|
|
43
|
Net (gains) losses on
sales of fixed assets
|
|
5
|
|
—
|
Equity (earnings)
losses, net of taxes
|
|
2
|
|
(42)
|
Other, net
|
|
32
|
|
39
|
Changes in current
assets and liabilities
|
|
|
|
|
Accounts and notes
receivable
|
|
7
|
|
103
|
Contract
assets
|
|
2
|
|
(52)
|
Inventories
|
|
76
|
|
52
|
Accounts payable and
accrued liabilities
|
|
(44)
|
|
(203)
|
Interest
payable
|
|
17
|
|
(5)
|
Other
|
|
(26)
|
|
(27)
|
Cash Provided By
(Used For) Operating Activities
|
|
395
|
|
345
|
Investment
Activities
|
|
|
|
|
Invested in capital
projects
|
|
(251)
|
|
(341)
|
Proceeds from sale of
fixed assets
|
|
1
|
|
2
|
Other
|
|
3
|
|
—
|
Cash Provided By
(Used For) Investment Activities
|
|
(247)
|
|
(339)
|
Financing
Activities
|
|
|
|
|
Repurchases of common
stock and payments of restricted stock tax withholding
|
|
(22)
|
|
(177)
|
Issuance of
debt
|
|
—
|
|
670
|
Reduction of
debt
|
|
(3)
|
|
(413)
|
Change in book
overdrafts
|
|
(5)
|
|
(26)
|
Dividends
paid
|
|
(161)
|
|
(162)
|
Cash Provided By
(Used for) Financing Activities
|
|
(191)
|
|
(108)
|
Effect of Exchange
Rate Changes on Cash and Temporary Investments
|
|
—
|
|
6
|
Change in Cash and
Temporary Investments
|
|
(43)
|
|
(96)
|
Cash and Temporary
Investments
|
|
|
|
|
Beginning of the
period
|
|
1,113
|
|
804
|
End of the
period
|
|
$
1,070
|
|
$
708
|
INTERNATIONAL PAPER
COMPANY Reconciliation
of Cash Provided by Operations to Free Cash
Flow Preliminary and
Unaudited (In
millions)
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
Cash Provided By
(Used For) Operating Activities
|
$
395
|
|
$
345
|
Adjustments:
|
|
|
|
Cash invested in
capital projects
|
(251)
|
|
(341)
|
Free Cash
Flow
|
$
144
|
|
$
4
|
Free cash flow is a
non-GAAP (Generally Accepted Accounting Principles) measure which
equals cash provided by (used for) operating activities subject to
the adjustments set forth in the reconciliation table above. The
most directly comparable GAAP measure is cash provided by
operations. Management believes that free cash flow is useful to
investors as a liquidity measure because it measures the amount of
cash generated that is available, after reinvesting in the
business, to maintain a strong balance sheet, pay dividends,
repurchase stock, service debt and make investments for future
growth. It should not be inferred that the entire free cash flow
amount is available for discretionary expenditures. By adjusting
for certain items, as reflected in the reconciliation table above,
that are not indicative of the Company's ongoing performance, free
cash flow also enables investors to perform meaningful comparisons
between past and present periods.
|
|
|
|
|
|
The non-GAAP financial
measures presented in this release have limitations as analytical
tools and should not be considered in isolation or as a substitute
for an analysis of our results calculated in accordance with GAAP.
In addition, because not all companies use identical calculations,
the Company's presentation of non-GAAP measures in this release may
not be comparable to similarly titled measures disclosed by other
companies, including companies in the same industry as
International Paper.
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Management believes
non-GAAP financial measures, when used in conjunction with
information presented in accordance with GAAP, can facilitate a
better understanding of the impact of various factors and trends on
the Company's financial results. Management also uses these
non-GAAP financial measures in making financial, operating and
planning decisions and in evaluating the Company's performance.
Investors are cautioned to not place undue reliance on any non-GAAP
financial measures used in this release.
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SOURCE International Paper