01—Abstract
Summary
Summary of the 10-K filed February 16, 2024. Cited figures are marked; the original filing is the authoritative source.
International Paper Company reported full-year 2023 net earnings attributable to shareholders of $288 milliona ($0.82 per diluted share), compared with $1.5 billion ($4.10 per diluted share) in 2022.
Net sales were $18.9 billionb versus $21.2 billion in 2022. The filing attributes the decline to weaker underlying demand, declining sales prices, inventory destocking by customers, and continued cost inflation. Adjusted Operating Earnings Attributable to Shareholders were $755 million ($2.16 per share) in 2023, versus $1.17 billion ($3.18 per share) in 2022.
Cash provided by operations, including discontinued operations, was $1.8 billionc, and free cash flow was $692 million. During 2023 the company sold its 50% stake in Ilim S.A. for $508 million, exiting Russia, and permanently closed its Orange, Texas containerboard mill and ceased production on two pulp machines at its Riegelwood, North Carolina and Pensacola, Florida mills. These actions produced pre-tax charges of roughly $347 million (mill closure, non-cash) and $75 million (machine shutdowns, non-cash), plus cash severance and shutdown charges of about $81 million and $37 million.
The company returned approximately $840 milliond to shareowners in 2023, including about $640 million of dividends and $200 million of share repurchases. Management expects the first quarter of 2024 to be an earnings trough and targets more than $400 million of net benefits from commercial and operational initiatives in 2024, with capital spending of $800 million to $1.0 billion.
At December 31, 2023, the company had approximately $5.6 billion of outstanding indebtedness, long-term credit ratings of BBB (S&P) and Baa2 (Moody's), both with stable outlooks, and about $1.9 billion of credit facilities. The filing also discloses a potential Brazilian tax exposure under the Sylvamo tax matters agreement, with assessments totaling approximately $393 million (adjusted for currency), of which the company would bear 60% of the first $300 million and 100% above that.
02—Key points
Key Highlights
- Net earnings attributable to shareholders fell to $288 million ($0.82 per diluted share) in 2023 from $1.5 billion ($4.10 per diluted share) in 2022.
- Net sales declined to $18.9 billion from $21.2 billion, with Industrial Packaging operating profit of $1.3 billion and Global Cellulose Fibers operating loss of $(17) million.
- Exited Russia by completing the sale of its 50% Ilim stake for $508 million, which the company says was fully completed on September 18, 2023.
- Closed the Orange, Texas containerboard mill and ceased two pulp machines in Riegelwood and Pensacola, with total pre-tax charges including about $347 million and $75 million of non-cash accelerated depreciation and write-offs.
- Generated $1.8 billion of operating cash flow and $692 million of free cash flow in 2023, and returned about $840 million to shareowners through dividends and buybacks.
- Targets capital spending of $800 million to $1.0 billion in 2024 and more than $400 million of net benefits from commercial and operational initiatives, with Q1 2024 expected to be an earnings trough.
- Carries about $5.6 billion of indebtedness and maintains BBB (S&P) and Baa2 (Moody's) long-term ratings, both with stable outlooks.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, International Paper kept $0.02.
- Revenue$16.03B100.0%
- Cost of revenue−$11.51B71.8%
- Gross profit$4.52B28.2%
- Operating costs−$4.21B26.2%
- Operating income$313.0M2.0%
- Interest, other & tax−$25.0M0.2%
- Net income$288.0M1.8%
Where FY2023 revenue went
$16.03B- Cost of revenue: $11.51B, 72% of revenue
- Other operating costs: $2.95B, 18% of revenue
- Net income: $288.0M, 1.8% of revenue
- SG&A: $1.26B, 7.8% of revenue
Kept 1.8% as net incomeNet income $288.0M · 1.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 16, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $16.03B$21.16B | −24.2% |
| Cost of Revenue | $11.51B$15.14B | −24.0% |
| Gross Profit | $4.52B$6.02B | −24.9% |
| SG&A Expenses | $1.26B$1.29B | −2.8% |
| Operating Income | $313.00M$1.74B | −82.0% |
| Interest Expense | $418.00M$403.00M | +3.7% |
| Net Income | $288.00M$1.50B | −80.9% |
| EPS (Basic) | $0.83$4.14 | −80.0% |
| EPS (Diluted) | $0.82$4.10 | −80.0% |
| Shares Outstanding (Basic) | 346.90M363.50M | −4.6% |
| Shares Outstanding (Diluted) | 349.10M367.00M | −4.9% |
05—Questions
Frequently Asked Questions
Why did International Paper's earnings decline sharply in 2023?
The filing attributes the decline to lower demand as consumers prioritized services and essential goods, customer inventory destocking, declining sales prices and unfavorable mix, and continued cost inflation. Business segment operating profit fell $599 million year over year, with higher operating costs of $926 million more than offsetting lower input costs of $982 million.
What were the major restructuring actions in 2023 and their charges?
In October 2023 the company announced actions that were executed in December 2023: permanent closure of its Orange, Texas containerboard mill and permanent cessation of two pulp machines at its Riegelwood, North Carolina and Pensacola, Florida mills. The mill closure resulted in about $347 million of pre-tax non-cash write-offs and accelerated depreciation and about $81 million of pre-tax cash severance and shutdown charges. The machine shutdowns resulted in about $75 million of non-cash charges and about $37 million of cash charges.
How is International Paper returning cash to shareholders and what is its outlook?
In 2023 the company returned approximately $840 million to shareowners, including about $640 million of dividends and $200 million of share repurchases. About $2.96 billion of share repurchase authorization remained at December 31, 2023. For 2024 the company is targeting capital expenditures of $800 million to $1.0 billion and expects more than $400 million of net benefits from its initiatives.
What is the company's debt and liquidity position?
At December 31, 2023, the company had approximately $5.6 billion of outstanding indebtedness and about $1.9 billion of credit facilities, including a $1.4 billion committed bank credit agreement and up to $500 million under its receivables securitization program. No borrowings were outstanding under the $1.4 billion credit agreement or the receivables program at year end. The company was in compliance with all debt covenants.
What contingent liabilities could affect investors?
The filing discloses Brazilian tax assessments tied to the 2007-2015 tax years under the Sylvamo tax matters agreement, totaling approximately $393 million (adjusted for currency exchange rates) including interest, penalties and fees. International Paper agreed to pay 60% of the first $300 million of any liability and 100% above that. The company also reports environmental reserves of approximately $251 million and asbestos-related liabilities of $97 million at December 31, 2023.
06—Continue