MEMPHIS,
Tenn., Oct. 26, 2023 /PRNewswire/
-- International Paper (NYSE: IP) today reported third quarter
2023 financial results.
THIRD QUARTER 2023 HIGHLIGHTS
- Net earnings of $165 million
($0.47 per diluted share); Adjusted
operating earnings (non-GAAP) of $224
million ($0.64 per diluted
share)
- $75 million of earnings
achieved from Building a Better IP initiatives, bringing
year-to-date to $195 million,
exceeding full-year targets
- Cash provided by operations of $468
million, bringing year-to-date to $1.3 billion
- Returned $160 million to
shareholders in dividends, bringing year-to-date to $679 million in share repurchases and
dividends
- Completed the sale of our Ilim Joint
Venture interest for $508
million
"Our third quarter results came in as expected, and we are
encouraged by continuing demand recovery across our portfolio,"
said Mark Sutton, Chairman and Chief
Executive Officer. "We exceeded our full-year target for Building a
Better IP through commercial and process improvement initiatives.
Our operations continue to perform reliably with a focus on
controlling costs. However, in this challenging macro environment,
we are not satisfied with our absolute results. We are taking
actions to structurally reduce fixed costs in our mill system,
while optimizing our supply chain and investing in our box
capabilities to grow with customers."
Diluted Net EPS and
Adjusted Operating EPS
|
|
|
|
|
|
Third
Quarter
2023
|
|
Second
Quarter
2023
|
|
Third
Quarter
2022
|
|
Net Earnings
(Loss)
|
|
$
0.47
|
|
$
0.68
|
|
$
2.64
|
|
Less – Discontinued
Operations (Gain) Loss, Net of Taxes
|
|
0.08
|
|
(0.04)
|
|
(0.18)
|
|
Net Earnings (Loss)
from Continuing Operations
|
|
0.55
|
|
0.64
|
|
2.46
|
|
Add Back –
Non-Operating Pension Expense (Income)
|
|
0.04
|
|
0.03
|
|
(0.13)
|
|
Add Back – Net Special
Items Expense (Income)
|
|
0.08
|
|
(0.02)
|
|
0.32
|
|
Income Taxes -
Non-Operating Pension and Special Items
|
|
(0.03)
|
|
(0.06)
|
|
(1.82)
|
|
Adjusted Operating
Earnings*
|
|
$
0.64
|
|
$
0.59
|
|
$
0.83
|
|
|
|
*
|
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)
|
|
Third
Quarter
2023
|
|
Second
Quarter
2023
|
|
Third
Quarter
2022
|
|
Net Sales
|
|
$
4,613
|
|
$
4,682
|
|
$
5,402
|
|
Net Earnings
(Loss)
|
|
165
|
|
235
|
|
951
|
|
Business Segment
Operating Profit (Loss)
|
|
352
|
|
334
|
|
464
|
|
Adjusted
Operating Earnings
|
|
224
|
|
204
|
|
300
|
|
Cash Provided By (Used
For) Operations
|
|
468
|
|
528
|
|
435
|
|
Free Cash
Flow**
|
|
240
|
|
261
|
|
197
|
|
|
|
**
|
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
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 (f) below under "Sales and Earnings by
Business Segment". Third quarter 2023 net sales by business segment
and operating profit (loss) by business segment compared with the
second quarter of 2023 and the third quarter of 2022 are as
follows:
Business Segment
Results
|
|
|
|
(In
millions)
|
|
Third
Quarter
2023
|
|
Second
Quarter
2023
|
|
Third
Quarter
2022
|
|
Net Sales by
Business Segment
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
3,787
|
|
$
3,884
|
|
$
4,385
|
|
Global Cellulose
Fibers
|
|
725
|
|
698
|
|
887
|
|
Corporate and
Inter-segment Sales
|
|
101
|
|
100
|
|
130
|
|
Net
Sales
|
|
$
4,613
|
|
$
4,682
|
|
$
5,402
|
|
Operating Profit
(Loss) by Business Segment
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
325
|
|
$
304
|
|
$
369
|
|
Global Cellulose
Fibers
|
|
27
|
|
30
|
|
95
|
|
Total Business
Segment Operating Profit (Loss)
|
|
$
352
|
|
$
334
|
|
$
464
|
|
Industrial Packaging operating profits (losses) in
the third quarter of 2023 were $325
million compared with $304
million in the second quarter of 2023. In North America, earnings improved despite lower
sales prices for containerboard and corrugated boxes and an
unfavorable geographic mix. The earnings improvement was driven by
higher sales volumes for containerboard, lower planned outage costs
and favorable adjustments related to employee benefit costs.
Economic downtime was lower, improving mill operating costs. Input
costs increased, primarily for energy, freight and recovered fiber.
In EMEA, earnings were lower, driven by seasonally lower volumes,
an unfavorable product mix and lower containerboard sales
prices.
Global Cellulose Fibers operating profits (losses) in the
third quarter of 2023 were $27
million compared with $30
million in the second quarter of 2023. Earnings were
slightly lower as lower pulp pricing was mostly offset by lower
distribution, input and operating costs, including favorable
adjustments related to employee benefit costs. Sales volumes
improved as seasonality was more than offset by an improving market
environment.
EQUITY METHOD INVESTMENT - ILIM JOINT
VENTURE
The Company completed the sale of its
investment in the prior Ilim joint venture in the third quarter of
2023 for proceeds of $508 million
($472 million net of transaction
costs). All current period and historical results have been
adjusted to reflect Ilim as a discontinued
operation.
CORPORATE EXPENSES
Corporate expenses, net was expense
of $20 million for the third quarter
of 2023 compared with expense of $8
million in the second quarter of 2023.
EFFECTIVE TAX RATE
The reported effective tax rate for
the third quarter of 2023 was 17%, compared to 13% in the second
quarter of 2023. The lower tax rate in the second quarter reflects
a tax benefit related to the closure of the 2015-2016 IRS
audit.
The operational effective tax rate was 18% for the third quarter
of 2023 compared to 22% in the second quarter of 2023. The lower
operational effective tax rate in the third quarter was primarily
due to increased U.S. research and development tax credits and
lower than estimated U.S. income taxes on foreign earnings.
The operational effective tax rate is a non-GAAP financial
measure and is calculated by adjusting the income tax provision
from continuing operations and rate to exclude the tax effect of
net special items and non-operating pension expense (income).
Management believes that this presentation provides useful
information to investors by providing a meaningful comparison of
the income tax rate between past and present periods.
EFFECTS OF SPECIAL ITEMS
Net special items in the
third quarter of 2023 amount to a net after-tax charge of
$22 million ($0.06 per diluted
share) compared with a benefit of $27
million ($0.08 per diluted
share) in the second quarter of 2023 and a benefit of $551 million ($1.53
per diluted share) in the third quarter of 2022. Net special items
in all periods include the following charges (gains):
|
|
Third Quarter
2023
|
|
Second Quarter
2023
|
|
Third Quarter
2022
|
(In
millions)
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
Restructuring and
other charges, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt extinguishment
costs
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
93
|
|
$
70
|
Total restructuring
and other charges, net
|
|
—
|
|
—
|
|
—
|
|
—
|
|
93
|
|
70
|
Environmental
remediation reserve adjustment
|
|
29
|
|
22
|
|
—
|
|
—
|
|
—
|
|
—
|
Sylvamo investment
(a)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(16)
|
|
(12)
|
Legal reserve
adjustments
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(15)
|
|
(11)
|
Tax benefit and
interest related to settlement of tax audits (b)
|
|
—
|
|
—
|
|
(6)
|
|
(27)
|
|
—
|
|
—
|
Tax benefit related to
timber monetization, net of interest (c)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
55
|
|
(563)
|
Tax benefit related to
exchange of Sylvamo shares (a)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(35)
|
Total special
items, net
|
|
$
29
|
|
$
22
|
|
$
(6)
|
|
$
(27)
|
|
$
117
|
|
$
(551)
|
|
|
(a)
|
See notes (g) and (i)
on the Consolidated Statement of Operations included later in this
release.
|
(b)
|
See notes (b) and (c)
on the Consolidated Statement of Operations included later in this
release.
|
(c)
|
See notes (h) and (i)
on the Consolidated Statement of Operations included later in this
release.
|
DISCONTINUED OPERATIONS, NET OF TAXES
Discontinued
operations, net of taxes include the equity earnings associated
with our Ilim joint venture. Discontinued operations, net of taxes
also includes the following special items charges (gains):
|
|
Third Quarter
2023
|
|
Second Quarter
2023
|
(In
millions)
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
Ilim equity method
investment impairment and transaction costs
|
|
$
59
|
|
$
50
|
|
$
33
|
|
$
33
|
Total
|
|
$
59
|
|
$
50
|
|
$
33
|
|
$
33
|
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) 720-6995 or, within the U.S. only,
(844) 291-6362, and ask to be connected to the International Paper
third quarter earnings call. The conference ID number is 266985.
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 7315213.
About International Paper
International Paper (NYSE:
IP) is a global producer of planet-friendly packaging, pulp and
other fiber-based products, and one of North America'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 2022 were $21.2 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 third quarter 2023. 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.
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.
Words such as "expects," "anticipates," "believes," "estimates" and
similar expressions identify forward-looking statements. These
statements are not guarantees of future performance and reflect
management's current views and are subject to risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in these statements. Factors which
could cause actual results to differ include but are not limited
to: (i) risks with respect to climate change and global, regional,
and local weather conditions, as well as risks related to our
ability to meet targets and goals with respect to climate change
and the emission of greenhouse gases and other environmental,
social and governance matters; (ii) the level of our indebtedness
and changes in interest rates (including the impact of current
elevated interest rate levels); (iii) 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, including possible instability in such markets
and/or disruptions to the banking system due to potential or actual
bank failures; (iv) domestic and global geopolitical conditions,
military conflict (including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas, 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; (v) the amount of our future pension funding
obligations, and pension and healthcare costs; (vi) unanticipated
expenditures or other adverse developments related to compliance
with existing and new environmental, tax, labor and employment,
privacy, anti-bribery and anti-corruption, and other U.S. and
non-U.S. governmental laws and regulations; (vii) 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; (viii) risks inherent in conducting
business through joint ventures; (ix) our ability to achieve the
benefits expected from, and other risks associated with,
acquisitions, joint ventures, divestitures, spinoffs and other
corporate transactions, (x) cybersecurity and information
technology risks, including as a result of security breaches and
cybersecurity incidents; (xi) loss contingencies and pending,
threatened or future litigation, including with respect to
environmental related matters; (xii) our exposure to claims under
our agreements with Sylvamo Corporation; (xiii) 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 (xiv) 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.
INTERNATIONAL PAPER
COMPANY Consolidated
Statement of Operations Preliminary and Unaudited (In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Three Months
Ended
June 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
Net
Sales
|
$
4,613
|
|
$
5,402
|
|
$
4,682
|
|
$
14,315
|
|
$
16,028
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
3,345
|
(a)
|
3,830
|
(e)
|
3,360
|
|
10,347
|
(a)
|
11,475
|
(e)
|
|
Selling and
administrative expenses
|
286
|
|
337
|
|
336
|
|
1,003
|
|
978
|
|
|
Depreciation,
amortization and cost of timber harvested
|
258
|
|
261
|
|
244
|
|
743
|
|
789
|
|
|
Distribution
expenses
|
382
|
|
471
|
|
376
|
|
1,180
|
|
1,337
|
|
|
Taxes other than
payroll and income taxes
|
39
|
|
38
|
|
40
|
|
115
|
|
110
|
|
|
Restructuring and other
charges, net
|
—
|
|
93
|
(f)
|
—
|
|
—
|
|
93
|
(f)
|
|
Net (gains) losses on
mark to market investments
|
—
|
|
(16)
|
(g)
|
—
|
|
—
|
|
(65)
|
(g)
|
|
Interest expense,
net
|
58
|
|
123
|
(h)
|
59
|
(b)
|
179
|
(b)
|
266
|
(h)
|
|
Non-operating pension
expense (income)
|
13
|
|
(48)
|
|
12
|
|
40
|
|
(144)
|
|
|
Earnings (Loss) From
Continuing Operations Before Income Taxes and Equity Earnings
(Loss)
|
232
|
|
313
|
|
255
|
|
708
|
|
1,189
|
|
|
Income tax provision
(benefit)
|
39
|
|
(575)
|
(i)
|
33
|
(c)
|
120
|
(c)
|
(384)
|
(i)
|
|
Equity earnings (loss),
net of taxes
|
(1)
|
|
(1)
|
|
—
|
|
(2)
|
|
(3)
|
|
|
Earnings (Loss) From
Continuing Operations
|
192
|
|
887
|
|
222
|
|
586
|
|
1,570
|
|
|
Discontinued
operations, net of taxes
|
(27)
|
(d)
|
64
|
|
13
|
(d)
|
(14)
|
(d)
|
252
|
|
|
Net Earnings
(Loss)
|
$
165
|
|
$ 951
|
|
$
235
|
|
$
572
|
|
$ 1,822
|
|
|
Basic Earnings Per
Common Share
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
$
0.55
|
|
$ 2.48
|
|
$
0.64
|
|
$
1.69
|
|
$ 4.28
|
|
|
Discontinued
operations, net of taxes
|
(0.08)
|
|
0.18
|
|
0.04
|
|
(0.04)
|
|
0.69
|
|
|
Net earnings
(loss)
|
$
0.47
|
|
$ 2.66
|
|
$
0.68
|
|
$
1.65
|
|
$ 4.97
|
|
|
Diluted Earnings Per
Common Share
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
$
0.55
|
|
$ 2.46
|
|
$
0.64
|
|
$
1.68
|
|
$ 4.24
|
|
|
Discontinued
operations, net of taxes
|
(0.08)
|
|
0.18
|
|
0.04
|
|
(0.04)
|
|
0.68
|
|
|
Net earnings
(loss)
|
$
0.47
|
|
$ 2.64
|
|
$
0.68
|
|
$
1.64
|
|
$ 4.92
|
|
|
Average Shares of
Common Stock Outstanding - Diluted
|
348.1
|
|
360.4
|
|
346.5
|
|
349.0
|
|
370.7
|
|
|
The accompanying notes
are an integral part of this consolidated statement of
operations.
|
(a)
|
Includes a pre-tax
charge of $29 million ($22 million after taxes) for the three
months and nine months ended September 30, 2023 for an
environmental remediation reserve adjustment.
|
(b)
|
Includes income of $6
million ($4 million after taxes) for the three months ended June
30, 2023 and the nine months ended September 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 nine months
ended September 30, 2023 related to the previously announced
settlement of the timber monetization restructuring tax
matter.
|
(c)
|
Includes a tax benefit
of $23 million for the three months ended June 30, 2023 and the
nine months ended September 30, 2023 related to the settlement of
tax audits.
|
(d)
|
Includes charges of $59
million ($50 million after taxes), $33 million (before and after
taxes) and $135 million ($126 million after taxes) for the three
months ended September 30, 2023 and June 30, 2023 and the nine
months ended September 30, 2023, respectively, for impairment and
transaction costs related to our former equity method investment in
the Ilim joint venture.
|
(e)
|
Includes pre-tax income
of $15 million ($11 million after taxes) for the three months and
nine months ended September 30, 2022 for a legal settlement, a
pre-tax charge of $15 million ($11 million after taxes) for the
nine months ended September 30, 2022 for an environmental
remediation reserve adjustment and a pre-tax charge of $6 million
($5 million after taxes) for the nine months ended September 30,
2022 for other costs.
|
(f)
|
Includes a pre-tax
charge of $93 million ($70 million after taxes) for the three
months and nine months ended September 30, 2022 for debt
extinguishment costs.
|
(g)
|
Includes pre-tax net
gains of $16 million ($12 million after taxes) and $65 million ($49
million after taxes) for the three months and nine months ended
September 30, 2022, respectively, related to our investment in
Sylvamo Corporation.
|
(h)
|
Includes a pre-tax
charge of $55 million ($41 million after taxes) for the three
months and nine months ended September 30, 2022 related to the
previously announced settlement of the timber monetization
restructuring tax matter.
|
(i)
|
Includes a tax benefit
of $604 million for the three months and nine months ended
September 30, 2022 related to the previously announced settlement
of the timber monetization restructuring tax matter and a tax
benefit of $35 million and $66 million for the three months and
nine months ended September 30, 2022, respectively, related to the
tax-free exchange of our shares of Sylvamo
Corporation.
|
INTERNATIONAL PAPER
COMPANY Reconciliation
of Net Earnings (Loss) to Adjusted Operating
Earnings Preliminary and
Unaudited (In millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Three Months
Ended
June 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
Net Earnings
(Loss)
|
$
165
|
|
$
951
|
|
$
235
|
|
$
572
|
|
$ 1,822
|
|
Less: Discontinued
operations, net of taxes (gain) loss
|
27
|
|
(64)
|
|
(13)
|
|
14
|
|
(252)
|
|
Earnings (Loss) from
Continuing Operations
|
192
|
|
887
|
|
222
|
|
586
|
|
1,570
|
|
Add back: Non-operating
pension expense (income)
|
13
|
|
(48)
|
|
12
|
|
40
|
|
(144)
|
|
Add back: Net special
items expense (income)
|
29
|
|
117
|
|
(6)
|
|
26
|
|
89
|
|
Income taxes -
Non-operating pension and special items
|
(10)
|
|
(656)
|
|
(24)
|
|
(39)
|
|
(656)
|
|
Adjusted Operating
Earnings
|
$
224
|
|
$
300
|
|
$
204
|
|
$
613
|
|
$
859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Three Months
Ended
June 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
Diluted Earnings per
Common Share as Reported
|
$
0.47
|
|
$ 2.64
|
|
$
0.68
|
|
$
1.64
|
|
$ 4.92
|
|
Less: Discontinued
operations, net of taxes (gain) loss
|
0.08
|
|
(0.18)
|
|
(0.04)
|
|
0.04
|
|
(0.68)
|
|
Continuing
Operations
|
0.55
|
|
2.46
|
|
0.64
|
|
1.68
|
|
4.24
|
|
Add back: Non-operating
pension expense (income)
|
0.04
|
|
(0.13)
|
|
0.03
|
|
0.11
|
|
(0.39)
|
|
Add back: Net special
items expense (income)
|
0.08
|
|
0.32
|
|
(0.02)
|
|
0.07
|
|
0.24
|
|
Income taxes per share
- Non-operating pension and special items
|
(0.03)
|
|
(1.82)
|
|
(0.06)
|
|
(0.10)
|
|
(1.77)
|
|
Adjusted Operating
Earnings per Share
|
$
0.64
|
|
$ 0.83
|
|
$
0.59
|
|
$
1.76
|
|
$ 2.32
|
|
|
|
|
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.
|
|
|
|
Since diluted earnings
per share are computed independently for each period, nine-month
per share amounts may not equal the sum of respective
quarters.
|
INTERNATIONAL PAPER COMPANY
Sales and Earnings by Business Segment Preliminary
and Unaudited
(In millions)
|
|
|
|
|
|
Net Sales by Business Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
|
|
Industrial
Packaging
|
$ 3,787
|
|
$ 4,385
|
|
$
3,884
|
|
$
11,754
|
|
$
13,282
|
|
|
|
|
Global Cellulose
Fibers
|
725
|
|
887
|
|
698
|
|
2,234
|
|
2,385
|
|
|
|
|
Corporate and
Inter-segment Sales
|
101
|
|
130
|
|
100
|
|
327
|
|
361
|
|
|
|
|
Net Sales
|
$ 4,613
|
|
$ 5,402
|
|
$
4,682
|
|
$
14,315
|
|
$
16,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit (Loss) by Business
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
|
|
Industrial
Packaging
|
$
325
|
|
$
369
|
|
$
304
|
|
$ 951
|
|
$
1,326
|
|
|
|
|
Global Cellulose
Fibers
|
27
|
|
95
|
|
30
|
|
41
|
|
71
|
|
|
|
|
Total Business Segment Operating Profit
(Loss)
|
$
352
|
|
$
464
|
|
$
334
|
|
$ 992
|
|
$
1,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) Before Income Taxes and Equity
Earnings
|
232
|
|
313
|
|
255
|
|
708
|
|
1,189
|
|
|
|
|
Interest expense,
net
|
58
|
|
123
|
(c)
|
59
|
(a)
|
179
|
(a)
|
266
|
(c)
|
|
|
|
Adjustment for less
than wholly owned subsidiaries (e)
|
—
|
|
(1)
|
|
—
|
|
—
|
|
(2)
|
|
|
|
|
Corporate expenses,
net
|
20
|
|
15
|
|
8
|
|
36
|
|
54
|
|
|
|
|
Corporate net special
items
|
29
|
(b)
|
62
|
(d)
|
—
|
|
29
|
(b)
|
34
|
(d)
|
|
|
|
Non-operating pension
expense (income)
|
13
|
|
(48)
|
|
12
|
|
40
|
|
(144)
|
|
|
|
|
Business Segment Operating Profit (Loss)
(f)
|
$
352
|
|
$
464
|
|
$
334
|
|
$ 992
|
|
$
1,397
|
|
|
|
|
|
(a)
|
Includes income of $6
million for the three months ended June 30, 2023 and the nine
months ended September 30, 2023 for interest income associated with
the settlement of tax audits and a charge of $3 million for the
nine months ended September 30, 2023 related to the previously
announced settlement of the timber monetization restructuring tax
matter.
|
(b)
|
Includes a charge of
$29 million for the three months and nine months ended September
30, 2023 for an environmental remediation reserve
adjustment.
|
(c)
|
Includes a charge of
$55 million for the three months and nine months ended September
30, 2022 related to the previously announced settlement of the
timber monetization restructuring tax matter.
|
(d)
|
Includes a charge of
$93 million for the three months and nine months ended September
30, 2022 for debt extinguishment costs, net gains of $16 million
and $65 million for the three months and nine months ended
September 30, 2022, respectively, related to our investment in
Sylvamo Corporation, income of $15 million for the three months and
nine months ended September 30, 2022 for a legal settlement, a
charge of $15 million for the nine months ended September 30, 2022
for an environmental remediation reserve adjustment and a charge of
$6 million for the nine months ended September 30, 2022 for other
costs.
|
(e)
|
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.
|
(f)
|
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.
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
September 30,
|
|
Three Months
Ended
June 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
Industrial Packaging
(In thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
Corrugated Packaging
(b)
|
2,329
|
|
2,522
|
|
2,393
|
|
7,103
|
|
7,759
|
|
Containerboard
|
677
|
|
677
|
|
600
|
|
1,821
|
|
2,096
|
|
Recycling
|
529
|
|
546
|
|
528
|
|
1,617
|
|
1,645
|
|
Saturated
Kraft
|
40
|
|
51
|
|
44
|
|
118
|
|
146
|
|
Gypsum /Release
Kraft
|
58
|
|
66
|
|
61
|
|
179
|
|
184
|
|
EMEA Packaging
(b)
|
299
|
|
297
|
|
317
|
|
951
|
|
1,019
|
|
Industrial
Packaging
|
3,932
|
|
4,159
|
|
3,943
|
|
11,789
|
|
12,849
|
|
Global Cellulose Fibers
(In thousands of metric tons) (c)
|
692
|
|
750
|
|
625
|
|
2,005
|
|
2,182
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
September 30,
2023
|
|
December 31,
2022
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash and Temporary
Investments
|
$
1,149
|
|
$
804
|
Accounts and Notes
Receivable, Net
|
3,078
|
|
3,284
|
Contract
Assets
|
474
|
|
481
|
Inventories
|
1,929
|
|
1,942
|
Assets Held for
Sale
|
—
|
|
133
|
Other
|
150
|
|
126
|
Total Current
Assets
|
6,780
|
|
6,770
|
Plants, Properties and
Equipment, Net
|
10,433
|
|
10,431
|
Investments
|
184
|
|
186
|
Long-Term Financial
Assets of Variable Interest Entities
|
2,308
|
|
2,294
|
Goodwill
|
3,041
|
|
3,041
|
Overfunded Pension Plan
Assets
|
324
|
|
297
|
Right of Use
Assets
|
459
|
|
424
|
Deferred Charges and
Other Assets
|
422
|
|
497
|
Total
Assets
|
$
23,951
|
|
$
23,940
|
Liabilities and
Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Notes Payable and
Current Maturities of Long-Term Debt
|
120
|
|
763
|
Accounts Payable and
Other Current Liabilities
|
3,762
|
|
4,237
|
Total Current
Liabilities
|
3,882
|
|
5,000
|
Long-Term
Debt
|
5,549
|
|
4,816
|
Long-Term Nonrecourse
Financial Liabilities of Variable Interest Entities
|
2,112
|
|
2,106
|
Deferred Income
Taxes
|
1,708
|
|
1,732
|
Underfunded Pension
Benefit Obligation
|
281
|
|
281
|
Postretirement and
Postemployment Benefit Obligation
|
134
|
|
150
|
Long-Term Lease
Obligations
|
317
|
|
283
|
Other
Liabilities
|
1,086
|
|
1,075
|
Equity
|
|
|
|
Common Stock
|
449
|
|
449
|
Paid-in
Capital
|
4,705
|
|
4,725
|
Retained
Earnings
|
9,938
|
|
9,855
|
Accumulated Other
Comprehensive Loss
|
(1,460)
|
|
(1,925)
|
|
13,632
|
|
13,104
|
Less: Common Stock Held
in Treasury, at Cost
|
4,750
|
|
4,607
|
Total Equity
|
8,882
|
|
8,497
|
Total Liabilities
and Equity
|
$
23,951
|
|
$
23,940
|
INTERNATIONAL PAPER
COMPANY Consolidated
Statement of Cash Flows Preliminary and Unaudited (In millions)
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
Operating
Activities
|
|
|
|
Net earnings
(loss)
|
$
572
|
|
$
1,822
|
Depreciation,
amortization and cost of timber harvested
|
743
|
|
789
|
Deferred income tax
expense (benefit), net
|
(47)
|
|
(816)
|
Restructuring and other
charges, net
|
—
|
|
93
|
Net (gains) losses on
mark to market investments
|
—
|
|
(65)
|
Net (gains) losses on
sales and impairments of equity method investments
|
135
|
|
—
|
Equity method dividends
received
|
13
|
|
204
|
Equity (earnings)
losses, net of taxes
|
(109)
|
|
(249)
|
Periodic pension
(income) expense, net
|
70
|
|
(87)
|
Other, net
|
36
|
|
126
|
Changes in current
assets and liabilities
|
|
|
|
Accounts and notes
receivable
|
201
|
|
(294)
|
Contract
assets
|
7
|
|
(138)
|
Inventories
|
62
|
|
(217)
|
Accounts payable and
accrued liabilities
|
(332)
|
|
218
|
Interest
payable
|
(5)
|
|
50
|
Other
|
(5)
|
|
(23)
|
Cash Provided By
(Used For) Operating Activities
|
1,341
|
|
1,413
|
Investment
Activities
|
|
|
|
Invested in capital
projects, net of insurance recoveries
|
(836)
|
|
(609)
|
Proceeds from sale of
equity method investments, net of transaction costs
|
472
|
|
—
|
Proceeds from exchange
of equity securities
|
—
|
|
311
|
Proceeds from sale of
fixed assets
|
4
|
|
11
|
Other
|
2
|
|
(6)
|
Cash Provided By
(Used For) Investment Activities
|
(358)
|
|
(293)
|
Financing
Activities
|
|
|
|
Repurchases of common
stock and payments of restricted stock tax withholding
|
(218)
|
|
(1,093)
|
Issuance of
debt
|
772
|
|
752
|
Reduction of
debt
|
(689)
|
|
(954)
|
Change in book
overdrafts
|
(26)
|
|
—
|
Dividends
paid
|
(482)
|
|
(509)
|
Net debt tender
premiums paid
|
—
|
|
(89)
|
Other
|
(1)
|
|
(2)
|
Cash Provided By
(Used for) Financing Activities
|
(644)
|
|
(1,895)
|
Effect of Exchange
Rate Changes on Cash and Temporary Investments
|
6
|
|
(9)
|
Change in Cash and
Temporary Investments
|
345
|
|
(784)
|
Cash and Temporary
Investments
|
|
|
|
Beginning of the
period
|
804
|
|
1,295
|
End of the
period
|
$
1,149
|
|
$
511
|
INTERNATIONAL PAPER COMPANY
Reconciliation of Cash Provided by Operations to Free Cash
Flow Preliminary and Unaudited
(In millions)
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
Cash Provided By (Used For) Operating
Activities
|
$
468
|
|
$
435
|
|
$
1,341
|
|
$
1,413
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Cash invested in
capital projects, net of insurance recoveries
|
(228)
|
|
(238)
|
|
(836)
|
|
(609)
|
|
|
Free Cash Flow
|
$
240
|
|
$
197
|
|
$
505
|
|
$
804
|
|
|
Free cash flow is a
non-GAAP (Generally Accepted Accounting Principles) measure and 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 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 condition and results of operations.
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