MEMPHIS,
Tenn., July 24, 2024 /PRNewswire/
-- International Paper (NYSE: IP) today reported second
quarter 2024 financial results.
SECOND QUARTER 2024 HIGHLIGHTS
- Second quarter net earnings of $498 million ($1.41
per diluted share); includes a tax benefit of $338 million ($0.96
per diluted share) related to internal legal entity
restructuring
- Second quarter adjusted operating earnings (non-GAAP)
of $193 million ($0.55 per diluted share)
- Second quarter cash provided by operations of
$365 million and returned
$160 million to shareholders in
dividends
"Reflecting on my first 90 days, I am confident in our teams'
ability to unlock substantial value at IP," said Andy Silvernail, Chief Executive Officer. "While
our second quarter financial results increased sequentially on
better price and seasonally higher volumes, we expect near-term
performance to be challenged. In order to accelerate improvement,
we are deploying an 80/20 business process. We will make the
changes needed to focus our portfolio, become excellent with our
customers and optimize our cost to deliver profitable growth. In
North America, our investments
will center on providing customers with the most reliable and
innovative packaging solutions. We also look forward to the
combination with DS Smith and together creating significant value
for our shareholders."
|
Diluted Net EPS and
Adjusted Operating EPS
|
|
|
|
|
|
Second
Quarter
2024
|
|
First
Quarter
2024
|
|
Second
Quarter
2023
|
|
|
Net Earnings (Loss) Per
Share
|
|
$
1.41
|
|
$
0.16
|
|
$
0.68
|
|
|
Less – Discontinued
Operations (Gain) Loss, Net of Taxes
|
|
—
|
|
—
|
|
(0.04)
|
|
|
Net Earnings (Loss)
from Continuing Operations
|
|
1.41
|
|
0.16
|
|
0.64
|
|
|
Add Back –
Non-Operating Pension Expense (Income)
|
|
(0.02)
|
|
(0.04)
|
|
0.03
|
|
|
Add Back – Net Special
Items Expense (Income)
|
|
0.14
|
|
0.05
|
|
(0.02)
|
|
|
Income Taxes -
Non-Operating Pension and Special Items
|
|
(0.98)
|
|
—
|
|
(0.06)
|
|
|
Adjusted Operating
Earnings Per Share*
|
|
$
0.55
|
|
$
0.17
|
|
$
0.59
|
|
|
|
|
*
|
Adjusted operating
earnings per share (non-GAAP) is defined as net earnings (loss) per
share (GAAP) excluding per share impact of discontinued operations,
net special items and non-operating pension expense (income).
Diluted earnings (loss) per share is the most directly comparable
GAAP measure. Management uses this measure to focus on on-going
operations, and believes that such measure is useful to investors
in assessing the operational performance of the Company and
enabling investors 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 and diluted earnings (loss) per share
to adjusted operating earnings per share, and an explanation of why
we believe these non-GAAP financial measures provide useful
information to investors, are included later in this
release.
|
|
Select Financial
Measures
|
|
|
|
|
(In
millions)
|
|
Second
Quarter
2024
|
|
First
Quarter
2024
|
|
Second
Quarter
2023
|
|
|
Net Sales
|
|
$
4,734
|
|
$
4,619
|
|
$
4,682
|
|
|
Net Earnings
(Loss)
|
|
498
|
|
56
|
|
235
|
|
|
Adjusted Operating
Earnings
|
|
193
|
|
61
|
|
204
|
|
|
Cash Provided By (Used
For) Operations
|
|
365
|
|
395
|
|
528
|
|
|
Free Cash
Flow**
|
|
167
|
|
144
|
|
261
|
|
|
|
|
**
|
Free cash flow is a
non-GAAP financial measure, which equals cash provided by
operations less cash invested in capital projects. 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
this non-GAAP financial measure provides useful information to
investors, are included later in this release.
|
SEGMENT INFORMATION
The following table presents net
sales and business segment operating profit (loss), which is the
Company's measure of segment profitability. Business segment
operating profit (loss) 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 and is presented in our financial statement footnotes in
accordance with ASC 280 - "Segment Reporting". Second quarter 2024
net sales by business segment and operating profit (loss) by
business segment compared with the first quarter of 2024 and the
second quarter of 2023 are as follows:
|
Business Segment
Results
|
|
|
|
|
(In
millions)
|
|
Second
Quarter
2024
|
|
First
Quarter
2024
|
|
Second
Quarter
2023
|
|
|
Net Sales by
Business Segment
|
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
3,931
|
|
$
3,808
|
|
$
3,884
|
|
|
Global Cellulose
Fibers
|
|
717
|
|
704
|
|
698
|
|
|
Corporate and
Inter-segment Sales
|
|
86
|
|
107
|
|
100
|
|
|
Net
Sales
|
|
$
4,734
|
|
$
4,619
|
|
$
4,682
|
|
|
Business Segment
Operating Profit (Loss)
|
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
291
|
|
$
216
|
|
$
304
|
|
|
Global Cellulose
Fibers
|
|
31
|
|
(47)
|
|
30
|
|
Industrial Packaging business segment operating profit
(loss) in the second quarter of 2024 was $291 million compared with $216 million in the first quarter of 2024. In
North America, business segment
operating profit (loss) increased driven by higher sales prices for
boxes, including benefits from our commercial strategies.
Containerboard sales prices also increased. Sales volumes increased
and include the impact of one additional shipping day in the second
quarter of 2024. Planned outage costs were lower. Operating costs
increased driven by spending to improve reliability partially
offset by the non-repeat of the Ixtac, Mexico fire impact. Input costs were lower, as
lower energy and other raw material costs were partially offset by
higher recovered fiber costs. In EMEA Packaging, business segment
operating profit (loss) was lower driven by seasonally lower
volumes and higher planned outage costs.
Global Cellulose Fibers business segment operating profit
(loss) in the second quarter of 2024 was $31
million compared with $(47)
million in the first quarter of 2024. The improvement of
business segment operating profit (loss) reflected higher average
sales prices for both fluff and paper and tissue grade pulp, lower
operating costs and lower planned outage costs. Input costs were
stable as lower energy costs were offset by higher chemicals and
wood costs.
EFFECTS OF SPECIAL ITEMS
Net special items includes
items considered by management to not be reflective of the
Company's underlying operations. Net special items in the second
quarter of 2024 amount to a net after-tax benefit of
$297 million ($0.84 per diluted
share) compared with a charge of $14
million ($0.04 per diluted
share) in the first quarter of 2024 and a benefit of $27 million ($0.08
per diluted share) in the second quarter of 2023. Net special items
in all periods include the following charges (benefits):
|
|
Second Quarter
2024
|
|
First Quarter
2024
|
|
Second 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
|
|
$
—
|
|
$
—
|
|
$
3
|
|
$
2
|
(e)
|
$
—
|
|
$
—
|
|
|
Total restructuring
and other charges, net
|
|
—
|
|
—
|
|
3
|
|
2
|
|
—
|
|
—
|
|
|
Environmental
remediation adjustment
|
|
25
|
|
19
|
(a)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
DS Smith combination
costs
|
|
17
|
|
17
|
(b)
|
5
|
|
4
|
(b)
|
—
|
|
—
|
|
|
Strategic advisory
fees
|
|
12
|
|
9
|
(b)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Legal reserve
adjustments
|
|
—
|
|
—
|
|
10
|
|
7
|
(f)
|
—
|
|
—
|
|
|
Closure
costs
|
|
—
|
|
—
|
|
5
|
|
4
|
(e)
|
—
|
|
—
|
|
|
Net (gain) loss on
miscellaneous land sales
|
|
(5)
|
|
(4)
|
(c)
|
5
|
|
4
|
(c)
|
—
|
|
—
|
|
|
Interest related to
settlement of tax audits
|
|
—
|
|
—
|
|
(10)
|
|
(7)
|
(g)
|
(6)
|
|
(4)
|
(g)
|
|
Tax benefit related to
internal legal entity restructuring
|
|
—
|
|
(338)
|
(d)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Tax benefit related to
settlement of tax audits
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(23)
|
(h)
|
|
Total special
items, net
|
|
$
49
|
|
$
(297)
|
|
$
18
|
|
$
14
|
|
$
(6)
|
|
$
(27)
|
|
|
|
|
(a)
|
Environmental
remediation adjustment associated with the remediation work at a
waste pit site at a mill acquired but never operated by the Company
and last utilized by the predecessor owner of the mill.
|
|
(b)
|
Transaction related
costs not reflective of the Company's underlying
operations.
|
|
(c)
|
(Gains) losses
recognized in connection with miscellaneous land sales that the
Company does not believe is reflective of the Company's underlying
operations.
|
|
(d)
|
Tax benefit resulting
from internal legal entity restructuring completed during the three
months ended June 30, 2024.
|
|
(e)
|
Severance and closure
costs associated with the Company's previously disclosed 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.
|
|
(f)
|
Legal reserve
adjustment associated with a previously discontinued
business.
|
|
(g)
|
Interest income on tax
overpayments in prior years associated with the settlement of
certain tax audits.
|
|
(h)
|
Tax benefit resulting
from tax overpayments in prior years associated with the settlement
of certain tax audits.
|
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 (409) 207-6984 or, within the U.S. only,
(877) 336-4440, and ask to be connected to the International Paper
second quarter earnings call. The conference ID number is 1187213.
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 3237041.
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, Europe Latin America and North Africa. Net sales for 2023 were
$18.9 billion.
Visit https://www.internationalpaper.com/investors for more
information regarding International Paper, including a slide
presentation regarding the second 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, as amended. 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
(GHG) and other environmental, social and governance matters,
including our ability to meet such targets and goals; (iv) loss
contingencies and pending, threatened or future litigation,
including with respect to environmental related matters; (v) 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); (vi) 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; (vii) 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; (viii) the amount of our future pension funding
obligations, and pension and healthcare costs; (ix) 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; (x) 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; (xi) our ability to realize expected benefits and cost
savings associated with restructuring initiatives; (xii)
cybersecurity and information technology risks, including as a
result of security breaches and cybersecurity incidents; (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. 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 International Paper common
stock ("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") in later summer/early autumn. 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 Mark S. Sutton, chairman of the Board,
Andrew K. Silvernail, also chief
executive officer, Jamie A. Beggs,
Christopher M. Connor, Ahmet C.
Dorduncu, Anders Gustafsson,
Jacqueline C. Hinman, Clinton A. Lewis, Jr., Kathryn D. Sullivan, Scott A. Tozier and Anton V. Vincent, all of whom are members of
International Paper's board of directors as well as 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; (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; and
(iii) our Current Reports on Form 8-K filed with the SEC on
March 19, 2024 and May 23, 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
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
June 30,
|
|
|
|
2024
|
|
2023
|
|
2024
|
|
2024
|
|
2023
|
|
|
Net
Sales
|
$
4,734
|
|
$
4,682
|
|
$
4,619
|
|
$
9,353
|
|
$
9,702
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
3,360
|
(a)
|
3,360
|
|
3,424
|
(a)
|
6,784
|
(a)
|
7,002
|
|
|
Selling and
administrative expenses
|
453
|
(b)
|
336
|
|
358
|
(b)
|
811
|
(b)
|
717
|
|
|
Depreciation and
amortization
|
261
|
|
244
|
|
278
|
(c)
|
539
|
(c)
|
485
|
|
|
Distribution
expenses
|
379
|
|
376
|
|
391
|
|
770
|
|
798
|
|
|
Taxes other than
payroll and income taxes
|
35
|
|
40
|
|
41
|
|
76
|
|
76
|
|
|
Restructuring and other
charges, net
|
—
|
|
—
|
|
3
|
(d)
|
3
|
(d)
|
—
|
|
|
Net (gains) losses on
sales of fixed assets
|
(5)
|
(e)
|
—
|
|
5
|
(e)
|
—
|
(e)
|
—
|
|
|
Interest expense,
net
|
55
|
|
59
|
(h)
|
46
|
(f)
|
101
|
(f)
|
121
|
(h)
|
|
Non-operating pension
expense (income)
|
(10)
|
|
12
|
|
(12)
|
|
(22)
|
|
27
|
|
|
Earnings (Loss) From
Continuing Operations Before Income Taxes and
Equity Earnings (Loss)
|
206
|
|
255
|
|
85
|
|
291
|
|
476
|
|
|
Income tax provision
(benefit)
|
(293)
|
(g)
|
33
|
(i)
|
27
|
|
(266)
|
(g)
|
81
|
(i)
|
|
Equity earnings (loss),
net of taxes
|
(1)
|
|
—
|
|
(2)
|
|
(3)
|
|
(1)
|
|
|
Earnings (Loss) From
Continuing Operations
|
498
|
|
222
|
|
56
|
|
554
|
|
394
|
|
|
Discontinued
operations, net of taxes
|
—
|
|
13
|
(j)
|
—
|
|
—
|
|
13
|
(j)
|
|
Net Earnings
(Loss)
|
$
498
|
|
$
235
|
|
$
56
|
|
$
554
|
|
$
407
|
|
|
Basic Earnings Per
Common Share
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
$
1.43
|
|
$
0.64
|
|
$
0.16
|
|
$
1.59
|
|
$
1.13
|
|
|
Discontinued
operations, net of taxes
|
—
|
|
0.04
|
|
—
|
|
—
|
|
0.04
|
|
|
Net earnings
(loss)
|
$
1.43
|
|
$
0.68
|
|
$
0.16
|
|
$
1.59
|
|
$
1.17
|
|
|
Diluted Earnings Per
Common Share
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
$
1.41
|
|
$
0.64
|
|
$
0.16
|
|
$
1.57
|
|
$
1.12
|
|
|
Discontinued
operations, net of taxes
|
—
|
|
0.04
|
|
—
|
|
—
|
|
0.04
|
|
|
Net earnings
(loss)
|
$
1.41
|
|
$
0.68
|
|
$
0.16
|
|
$
1.57
|
|
$
1.16
|
|
|
Average Shares of
Common Stock Outstanding - Diluted
|
352.8
|
|
346.5
|
|
348.5
|
|
352.7
|
|
349.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of this Consolidated Statement of
Operations.
|
|
(a)
|
Includes a pre-tax
charge of $25 million ($19 million after taxes) for the three
months and six months ended June 30, 2024 for environmental
adjustments and a pre-tax charge of $10 million ($7 million after
taxes) for the three months ended March 31, 2024 and the six months
ended June 30, 2024 for a litigation reserve.
|
|
(b)
|
Includes pre-tax
charges of $17 million (before and after taxes), $5 million ($4
million after taxes) and $22 million ($21 million after taxes) for
the three months ended June 30, 2024 and March 31, 2024 and the six
months ended June 30, 2024, respectively, for costs associated with
our announced agreement of an all-share combination with DS Smith
Plc and a pre-tax charge of $12 million ($9 million after taxes)
for the three months and six months ended June 30, 2024 for
strategic advisory fees.
|
|
(c)
|
Includes a pre-tax
charge of $5 million ($4 million after taxes) for the three months
ended March 31, 2024 and the six months ended June 30, 2024 for
closure 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.
|
|
(d)
|
Includes a pre-tax
charge of $3 million ($2 million after taxes) for the three months
ended March 31, 2024 and the six months ended June 30, 2024 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.
|
|
(e)
|
Includes a pre-tax net
gain of $5 million ($4 million after taxes) and a pre-tax net loss
of $5 million ($4 million after taxes) for the three months ended
June 30, 2024 and March 31, 2024, respectively, 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 and the six months ended June 30, 2024 for interest
income associated with the settlement of tax audits.
|
|
(g)
|
Includes a tax benefit
of $338 million for the three months and six months ended June 30,
2024 related to internal legal entity restructuring.
|
|
(h)
|
Includes pre-tax income
of $6 million ($4 million after taxes) for the three months and six
months ended June 30, 2023 for interest income associated with the
settlement of tax audits and a pre-tax charge of $3 million ($2
million after taxes) for the six months ended June 30, 2023 related
to the previously announced settlement of the timber monetization
restructuring tax matter.
|
|
(i)
|
Includes a tax benefit
of $23 million for the three months and six months ended June 30,
2023 related to the settlement of tax audits.
|
|
(j)
|
Includes charges of $33
million (before and after taxes) and $76 million (before and after
taxes) for the three months and the six months ended June 30, 2023,
respectively, for the impairment of our equity method investment in
the Ilim joint venture.
|
|
INTERNATIONAL PAPER
COMPANY
Reconciliation of Net Earnings (Loss) to Adjusted Operating
Earnings
Preliminary and Unaudited
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
June 30,
|
|
|
|
2024
|
|
2023
|
|
2024
|
|
2024
|
|
2023
|
|
|
Net Earnings
(Loss)
|
$
498
|
|
$
235
|
|
$
56
|
|
$
554
|
|
$
407
|
|
|
Less: Discontinued
operations, net of taxes (gain) loss
|
—
|
|
(13)
|
|
—
|
|
—
|
|
(13)
|
|
|
Earnings (Loss) from
Continuing Operations
|
498
|
|
222
|
|
56
|
|
554
|
|
394
|
|
|
Add back: Non-operating
pension expense (income)
|
(10)
|
|
12
|
|
(12)
|
|
(22)
|
|
27
|
|
|
Add back: Net special
items expense (income)
|
49
|
|
(6)
|
|
18
|
|
67
|
|
(3)
|
|
|
Income taxes -
Non-operating pension and special items
|
(344)
|
|
(24)
|
|
(1)
|
|
(345)
|
|
(29)
|
|
|
Adjusted Operating
Earnings
|
$
193
|
|
$
204
|
|
$
61
|
|
$
254
|
|
$
389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
June 30,
|
|
|
|
2024
|
|
2023
|
|
2024
|
|
2024
|
|
2023
|
|
|
Diluted Earnings per
Common Share as Reported
|
$
1.41
|
|
$
0.68
|
|
$
0.16
|
|
$
1.57
|
|
$ 1.16
|
|
|
Less: Discontinued
operations, net of taxes (gain) loss
|
—
|
|
(0.04)
|
|
—
|
|
—
|
|
(0.04)
|
|
|
Continuing
Operations
|
1.41
|
|
0.64
|
|
0.16
|
|
1.57
|
|
1.12
|
|
|
Add back: Non-operating
pension expense (income)
|
(0.02)
|
|
0.03
|
|
(0.04)
|
|
(0.06)
|
|
0.08
|
|
|
Add back: Net special
items expense (income)
|
0.14
|
|
(0.02)
|
|
0.05
|
|
0.19
|
|
(0.01)
|
|
|
Income taxes per share
- Non-operating pension and special items
|
(0.98)
|
|
(0.06)
|
|
—
|
|
(0.98)
|
|
(0.08)
|
|
|
Adjusted Operating
Earnings per Share
|
$
0.55
|
|
$
0.59
|
|
$
0.17
|
|
$
0.72
|
|
$ 1.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Earnings and Adjusted Operating Earnings Per Share are non-GAAP
measures defined as net earnings (loss) (a GAAP measure) excluding
discontinued operations, net special items and non-operating
pension expense (income). Net earnings (loss) and Diluted earnings
(loss) per share are the most directly comparable GAAP measures.
The Company calculates Adjusted Operating Earnings (non-GAAP) by
excluding the after-tax effect of discontinued operations,
non-operating pension expense (income) and net special items, as
described in greater detail above, from the net earnings (loss)
reported under U.S. GAAP. Adjusted Operating Earnings Per Share is
calculated by dividing Adjusted Operating Earnings by the diluted
average shares of common stock outstanding. Management uses these
non-GAAP measures to focus on on-going operations, and believes
that such non-GAAP measures are useful to investors in assessing
the operational performance of the Company and enabling investors
to perform meaningful comparisons of past and present consolidated
operating results from continuing operations. The Company believes
that using these non-GAAP measures, along with the most directly
comparable GAAP measures, provides for a more complete analysis of
the Company's results of operations.
|
|
|
|
Non-operating pension
expense (income) represents amortization of prior service cost,
amortization of actuarial gains/losses, expected return on assets
and interest cost. The Company excludes these amounts from Adjusted
Operating Earnings as the Company does not believe these items
reflect ongoing operations. These particular pension cost elements
are not directly attributable to current employee service. The
Company includes service cost in our Non-GAAP measure as it is
directly attributable to employee service, and the corresponding
employees' compensation elements, in connection with ongoing
operations.
|
|
|
|
Since diluted earnings
per share are computed independently for each period, six-month per
share amounts may not equal the sum of respective
quarters.
|
|
INTERNATIONAL PAPER
COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In millions)
|
|
June 30,
2024
|
|
December 31,
2023
|
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and Temporary
Investments
|
$
1,049
|
|
$
1,113
|
|
Accounts and Notes
Receivable, Net
|
3,197
|
|
3,059
|
|
Contract
Assets
|
436
|
|
433
|
|
Inventories
|
1,728
|
|
1,889
|
|
Other
|
147
|
|
114
|
|
Total Current
Assets
|
6,557
|
|
6,608
|
|
Plants, Properties and
Equipment, Net
|
9,953
|
|
10,150
|
|
Investments
|
163
|
|
163
|
|
Long-Term Financial
Assets of Variable Interest Entities
|
2,321
|
|
2,312
|
|
Goodwill
|
3,040
|
|
3,041
|
|
Overfunded Pension Plan
Assets
|
171
|
|
118
|
|
Right of Use
Assets
|
439
|
|
448
|
|
Deferred Charges and
Other Assets
|
419
|
|
421
|
|
Total
Assets
|
$
23,063
|
|
$
23,261
|
|
Liabilities and
Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Notes Payable and
Current Maturities of Long-Term Debt
|
259
|
|
138
|
|
Accounts Payable and
Other Current Liabilities
|
3,855
|
|
3,821
|
|
Total Current
Liabilities
|
4,114
|
|
3,959
|
|
Long-Term
Debt
|
5,329
|
|
5,455
|
|
Long-Term Nonrecourse
Financial Liabilities of Variable Interest Entities
|
2,117
|
|
2,113
|
|
Deferred Income
Taxes
|
1,131
|
|
1,552
|
|
Underfunded Pension
Benefit Obligation
|
249
|
|
280
|
|
Postretirement and
Postemployment Benefit Obligation
|
130
|
|
140
|
|
Long-Term Lease
Obligations
|
299
|
|
312
|
|
Other
Liabilities
|
1,099
|
|
1,095
|
|
Equity
|
|
|
|
|
Common Stock
|
449
|
|
449
|
|
Paid-in
Capital
|
4,688
|
|
4,730
|
|
Retained
Earnings
|
9,719
|
|
9,491
|
|
Accumulated Other
Comprehensive Loss
|
(1,580)
|
|
(1,565)
|
|
13,276
|
|
13,105
|
|
Less: Common Stock Held
in Treasury, at Cost
|
4,681
|
|
4,750
|
|
Total Equity
|
8,595
|
|
8,355
|
|
Total Liabilities
and Equity
|
$
23,063
|
|
$
23,261
|
|
INTERNATIONAL PAPER
COMPANY
Consolidated Statement of Cash Flows
Preliminary and Unaudited
(In millions)
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
Operating
Activities
|
|
|
|
|
Net earnings
(loss)
|
$
554
|
|
$
407
|
|
Depreciation and
amortization
|
539
|
|
485
|
|
Deferred income tax
expense (benefit), net
|
(427)
|
|
(13)
|
|
Restructuring and other
charges, net
|
3
|
|
—
|
|
Net (gains) losses on
sales and impairments of equity method investments
|
—
|
|
76
|
|
Equity method dividends
received
|
—
|
|
13
|
|
Equity (earnings)
losses, net of taxes
|
3
|
|
(88)
|
|
Periodic pension
(income) expense, net
|
(1)
|
|
47
|
|
Other, net
|
77
|
|
34
|
|
Changes in current
assets and liabilities
|
|
|
|
|
Accounts and notes
receivable
|
(161)
|
|
160
|
|
Contract
assets
|
(3)
|
|
(9)
|
|
Inventories
|
112
|
|
87
|
|
Accounts payable and
accrued liabilities
|
90
|
|
(280)
|
|
Interest
payable
|
4
|
|
(23)
|
|
Other
|
(30)
|
|
(23)
|
|
Cash Provided By
(Used For) Operating Activities
|
760
|
|
873
|
|
Investment
Activities
|
|
|
|
|
Invested in capital
projects
|
(449)
|
|
(608)
|
|
Proceeds from sale of
fixed assets
|
4
|
|
3
|
|
Other
|
(1)
|
|
2
|
|
Cash Provided By
(Used For) Investment Activities
|
(446)
|
|
(603)
|
|
Financing
Activities
|
|
|
|
|
Repurchases of common
stock and payments of restricted stock tax withholding
|
(22)
|
|
(218)
|
|
Issuance of
debt
|
—
|
|
772
|
|
Reduction of
debt
|
(8)
|
|
(536)
|
|
Change in book
overdrafts
|
(14)
|
|
(33)
|
|
Dividends
paid
|
(321)
|
|
(322)
|
|
Other
|
—
|
|
(1)
|
|
Cash Provided By
(Used for) Financing Activities
|
(365)
|
|
(338)
|
|
Effect of Exchange
Rate Changes on Cash and Temporary Investments
|
(13)
|
|
10
|
|
Change in Cash and
Temporary Investments
|
(64)
|
|
(58)
|
|
Cash and Temporary
Investments
|
|
|
|
|
Beginning of the
period
|
1,113
|
|
804
|
|
End of the
period
|
$
1,049
|
|
$
746
|
|
INTERNATIONAL PAPER COMPANY
Reconciliation of Cash Provided by Operations to Free Cash
Flow
Preliminary and Unaudited
(In millions)
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
Cash Provided By (Used For) Operating
Activities
|
$
365
|
|
$
528
|
|
$
760
|
|
$
873
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Cash invested in
capital projects
|
(198)
|
|
(267)
|
|
(449)
|
|
(608)
|
|
|
|
Free Cash Flow
|
$
167
|
|
$
261
|
|
$
311
|
|
$
265
|
|
|
|
|
|
Free cash flow is a
non-GAAP measure which equals cash provided by (used for) operating
activities less cash invested in capital projects, and the most
directly comparable GAAP measure is cash provided by operations.
Management utilizes this measure in connection with managing our
business and 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.
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
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