Why did earnings decline from the second quarter of 2024?

Net earnings fell to $150 million from $498 million in the second quarter, which included a net special items benefit of $297 million after tax. Adjusted operating earnings declined to $153 million from $193 million, as higher prices were more than offset by seasonally lower volumes, higher operating costs, higher input costs, and higher planned outage costs, particularly in Industrial Packaging.

What are the company's main restructuring actions?

The company cited an 80/20 strategic approach that includes organizational restructuring, corporate cost reductions, investments in its most competitive assets, and facility closures to structurally reduce operating costs. Third-quarter severance costs were $56 million pre-tax, and the filing references the permanent closure of a containerboard mill in Orange, Texas and the permanent shutdown of pulp machines at Riegelwood, North Carolina and Pensacola, Florida.

What is the status of the DS Smith combination?

Management stated that it expects the all-share combination with DS Smith Plc to close early in the first quarter of 2025. The company recorded $26 million of pre-tax DS Smith combination costs in the third quarter and $48 million for the first nine months of 2024.

Is the company considering selling any businesses?

Yes. The company stated it is exploring strategic options for its Global Cellulose Fibers business. The release lists this review among its forward-looking risk factors, including the risk that the review does not produce the expected results.

How much cash did the business generate and return to shareholders?

In the third quarter, cash provided by operations was $521 million and free cash flow was $309 million. The company returned $161 million to shareholders in dividends. For the nine months ended September 30, 2024, cash provided by operations was $1,281 million and free cash flow was $620 million, and dividends paid totaled $482 million.

IP/INPAP 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed October 31, 2024. Cited figures are marked; the original filing is the authoritative source.

International Paper reported third-quarter 2024 net earnings of $150 million^a ($0.42 per diluted share), compared with $498 million in the second quarter of 2024 and $165 million in the third quarter of 2023.

Third-quarter adjusted operating earnings (non-GAAP) were $153 million^b ($0.44 per diluted share), versus $193 million ($0.55) in the second quarter and $224 million ($0.64) a year earlier. Net sales were $4,686 million, down from $4,734 million in the second quarter and up from $4,613 million in the third quarter of 2023. Management attributed higher prices across the portfolio, including benefits from its packaging go-to-market strategy, to a moderately improving box demand environment, while higher operating costs and lower volumes due to seasonality and commercial actions weighed on results.

Industrial Packaging operating profit fell to $197 million^c from $291 million in the second quarter, reflecting seasonally lower volumes, higher operating costs and input costs, and higher planned outage costs in North America. Global Cellulose Fibers operating profit rose to $40 million from $31 million in the second quarter. Net special items were a after-tax charge of $12 million ($0.04 per diluted share), including $56 million of pre-tax severance costs tied to the 80/20 strategic approach, $26 million of DS Smith combination costs, and $25 million of strategic advisory fees.

Third-quarter cash provided by operations was $521 million^d and free cash flow was $309 million, and the company returned $161 million to shareholders in dividends. Management described a strategy focused on profitable growth, with organizational restructuring, corporate cost reductions, facility closures to structurally reduce operating costs, and an exploration of strategic options for the Global Cellulose Fibers business. The company stated that it expects the proposed combination with DS Smith Plc to close early in the first quarter of 2025.

02—Key points

Key Highlights

Third-quarter net earnings were $150 million ($0.42 per diluted share), versus $498 million in the second quarter of 2024 and $165 million in the third quarter of 2023.
Adjusted operating earnings (non-GAAP) were $153 million ($0.44 per diluted share), down from $193 million ($0.55) in the second quarter and $224 million ($0.64) in the third quarter of 2023.
Industrial Packaging operating profit declined to $197 million from $291 million in the second quarter, driven by seasonally lower volumes, higher operating and input costs, and higher planned outage costs.
Global Cellulose Fibers operating profit improved to $40 million from $31 million in the second quarter, reflecting higher average sales prices for fluff and paper and tissue grade pulp.
Cash provided by operations was $521 million and free cash flow was $309 million in the third quarter; dividends returned to shareholders totaled $161 million.
Net special items were a $12 million after-tax charge ($0.04 per diluted share), including $56 million of pre-tax severance tied to the 80/20 strategic approach.
The company is exploring strategic options for its Global Cellulose Fibers business and expects the DS Smith combination to close early in the first quarter of 2025.

03—Questions

Frequently Asked Questions

Why did earnings decline from the second quarter of 2024?
Net earnings fell to $150 million from $498 million in the second quarter, which included a net special items benefit of $297 million after tax. Adjusted operating earnings declined to $153 million from $193 million, as higher prices were more than offset by seasonally lower volumes, higher operating costs, higher input costs, and higher planned outage costs, particularly in Industrial Packaging.
What are the company's main restructuring actions?
The company cited an 80/20 strategic approach that includes organizational restructuring, corporate cost reductions, investments in its most competitive assets, and facility closures to structurally reduce operating costs. Third-quarter severance costs were $56 million pre-tax, and the filing references the permanent closure of a containerboard mill in Orange, Texas and the permanent shutdown of pulp machines at Riegelwood, North Carolina and Pensacola, Florida.
What is the status of the DS Smith combination?
Management stated that it expects the all-share combination with DS Smith Plc to close early in the first quarter of 2025. The company recorded $26 million of pre-tax DS Smith combination costs in the third quarter and $48 million for the first nine months of 2024.
Is the company considering selling any businesses?
Yes. The company stated it is exploring strategic options for its Global Cellulose Fibers business. The release lists this review among its forward-looking risk factors, including the risk that the review does not produce the expected results.
How much cash did the business generate and return to shareholders?
In the third quarter, cash provided by operations was $521 million and free cash flow was $309 million. The company returned $161 million to shareholders in dividends. For the nine months ended September 30, 2024, cash provided by operations was $1,281 million and free cash flow was $620 million, and dividends paid totaled $482 million.

04—Continue

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