01—Abstract
Summary
Summary of the 10-Q filed May 7, 2025. Cited figures are marked; the original filing is the authoritative source.
International Paper Company reported a net loss of $(105) million, or $(0.24) per diluted share, for the first quarter of 2025, compared with net earnings of $56 milliona ($0.16 per diluted share) in the first quarter of 2024.
Net sales rose to $5,901 millionb from $4,619 million, driven by the addition of the DS Smith business, which was acquired on January 31, 2025 in a share-based transaction with a purchase consideration of approximately $9.9 billion. Results included $249 million of net special items expense, largely DS Smith combination costs of $221 million and severance and other costs of $83 million, including the closure of the Red River containerboard mill in Campti, Louisiana. Adjusted operating earnings were $101 million ($0.23 per diluted share), compared with $61 million ($0.17 per diluted share) in the first quarter of 2024.
The company stated that North American industry demand declined year over year and that it expects that trend to continue into the second quarter of 2025, citing tariff-related uncertainty. Cash used for operations was $(288) million, compared with cash provided of $395 millionc a year earlier, and free cash flow was $(618) million. The company attributed the cash outflow primarily to the timing of its annual incentive compensation payout and about $670 million of total significant payments, including DS Smith transaction costs.
Total debt rose, with long-term debt of $9,175 milliond at March 31, 2025, versus $5,368 million at December 31, 2024. Total equity increased to $18,092 million from $8,173 million, reflecting the share issuance for the acquisition. The company also agreed to divest five European plants as a condition of European Commission clearance, with a closing expected by the end of the second quarter of 2025.
Full-year 2025 capital expenditures are currently expected to be approximately $1.8 billion to $1.9 billion. The company reported it was in compliance with its debt covenants at March 31, 2025, and held long-term credit ratings of BBB (stable outlook) from S&P and Baa2 (stable outlook) from Moody's.
02—Key points
Key Highlights
- Net sales were $5,901 million in Q1 2025, up from $4,619 million a year earlier, primarily from the DS Smith business acquired on January 31, 2025.
- Net loss was $(105) million, or $(0.24) per diluted share, versus net earnings of $56 million ($0.16 per diluted share) in Q1 2024.
- Adjusted operating earnings were $101 million ($0.23 per diluted share), compared with $61 million ($0.17 per diluted share) in Q1 2024; net special items expense was $249 million.
- Cash used for operations was $(288) million and free cash flow was $(618) million, reflecting incentive compensation payments and about $670 million of significant cash payments including DS Smith transaction costs.
- The DS Smith acquisition added $9.9 billion in purchase consideration through the issuance of 178,126,631 shares, and the holders of the new shares own approximately 34.1% of the company's outstanding share capital.
- Management reported that North American industry demand declined year over year in Q1 2025 and expects that trend to continue into Q2 2025, citing uncertainty related to tariffs.
- Five European plants are being divested as a condition of European Commission clearance; the company agreed to sell them to Palm Group of Germany, with closing expected by the end of Q2 2025.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2025, International Paper lost $0.02.
- Revenue$5.26B100.0%
- Cost of revenue−$3.81B72.3%
- Gross profit$1.46B27.7%
- Operating costs−$1.58B30.1%
- Operating income−$124.0M2.4%
- Interest, other & tax$19.0M0.4%
- Net income−$105.0M2.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed May 7, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $5.26B$3.92B | +34.5% |
| Cost of Revenue | $3.81B$3.42B | +11.1% |
| Gross Profit | $1.46B$491.00M | +197.1% |
| SG&A Expenses | $487.00M$358.00M | +36.0% |
| Operating Income | -$124.00M$169.00M | −173.4% |
| Interest Expense | $135.00M$109.00M | +23.9% |
| Net Income | -$105.00M$56.00M | −287.5% |
| EPS (Basic) | $-0.24$0.16 | −250.0% |
| EPS (Diluted) | $-0.24$0.16 | −250.0% |
| Shares Outstanding (Basic) | 437.60M346.70M | +26.2% |
| Shares Outstanding (Diluted) | 437.60M348.50M | +25.6% |
05—Questions
Frequently Asked Questions
Why did International Paper report a net loss in the first quarter of 2025?
The filing attributes the $(105) million net loss largely to $249 million of net special items expense, including $221 million of DS Smith combination costs and $83 million of severance and other costs. Those items were partly offset by a $67 million net gain on sales of fixed assets. Depreciation and amortization rose to $571 million from $278 million, including $197 million of accelerated depreciation tied to mill and other 80/20 strategic actions.
How did the DS Smith acquisition affect International Paper's financial position?
The acquisition, completed January 31, 2025, increased total assets to $41,168 million from $22,800 million at year-end 2024 and raised long-term debt to $9,175 million from $5,368 million. Goodwill increased to $7,242 million and intangibles, net, to $4,585 million. Total equity rose to $18,092 million from $8,173 million, reflecting the share issuance. The company stated that the acquisition's purchase price and allocation are preliminary.
What is driving the negative free cash flow?
Cash used for operations was $(288) million, primarily reflecting the timing of the annual incentive compensation payout and payment of DS Smith transaction costs and other transformation costs, totaling approximately $670 million. Capital expenditures were $330 million, up from $251 million a year earlier. Management said the company expects full-year 2025 capital expenditures of approximately $1.8 billion to $1.9 billion.
What is the outlook for the business in the second quarter of 2025?
Management said North American industry demand was down year over year in Q1 2025 and expects that trend to continue into Q2 2025. In Packaging Solutions North America, it expects higher volumes entering the second quarter and higher operating costs and planned maintenance downtime costs. Packaging Solutions EMEA sales are expected to be higher, reflecting one additional month of DS Smith sales. Global Cellulose Fibers volumes are expected to be stable, with higher planned maintenance downtime costs.
Is International Paper in compliance with its debt covenants and what are its credit ratings?
The company stated it was in compliance with all of its debt covenants at March 31, 2025, and was well below the thresholds stipulated under the covenants. It held long-term credit ratings of BBB (stable outlook) from S&P and Baa2 (stable outlook) from Moody's. The company had $175 million of commercial paper borrowings outstanding and no borrowings outstanding under its $1.4 billion credit agreement.
06—Continue