MEMPHIS,
Tenn., July 28, 2022 /PRNewswire/
-- International Paper (NYSE: IP) today reported second
quarter 2022 financial results.
SECOND QUARTER 2022 HIGHLIGHTS
- Second quarter net earnings (loss) attributable to
International Paper of $511 million
($1.38 per diluted share) compared
with $360 million ($0.95 per diluted share) in the first quarter of
2022 and $432 million ($1.09 per diluted share) in the second quarter of
2021. Second quarter adjusted operating earnings* (non-GAAP) of
$459 million ($1.24 per diluted share) compared with
$288 million ($0.76 per diluted share) in the first quarter of
2022 and $325 million ($0.82 per diluted share) in the second quarter of
2021.
- 13% year-over-year revenue growth
- $65 million of earnings
achieved from Building a Better IP initiatives, bringing
year-to-date to $105 million
- Cash provided by operations of $390
million, bringing year-to-date to $978 million
- Returned $565 million to
shareholders through share repurchases of $395 million and dividends of $170 million in the second quarter, bringing
year-to-date to $1.1 billion
"International Paper delivered strong revenue and earnings
growth in the second quarter," said Mark
Sutton, Chairman and Chief Executive Officer. "We performed
well both commercially and operationally, which contributed to
margin expansion despite a challenging supply chain and input cost
environment. Looking ahead to the third quarter, we expect the
realization of prior price movements to outpace higher input
costs."
Sutton added, "Our Building a Better IP set of initiatives
delivered $65 million of additional
earnings improvement in the second quarter, for a total of
$105 million through the first half
of the year. Given this strong momentum, we are confident in
achieving the high end of our full-year target."
Diluted Net EPS
Attributable to International Paper Shareholders and Adjusted
Operating EPS
|
|
|
|
Second
Quarter
2022
|
|
First
Quarter
2022
|
|
Second
Quarter
2021
|
Net Earnings (Loss)
Attributable to International Paper
|
|
$
1.38
|
|
$
0.95
|
|
$
1.09
|
Less – Discontinued
Operations (Gain) Loss
|
|
—
|
|
—
|
|
(0.31)
|
Net Earnings (Loss)
from Continuing Operations
|
|
1.38
|
|
0.95
|
|
0.78
|
Add Back –
Non-Operating Pension Expense (Income)
|
|
(0.09)
|
|
(0.10)
|
|
(0.10)
|
Add Back – Net Special
Items Expense (Income)
|
|
(0.05)
|
|
(0.09)
|
|
0.14
|
Adjusted Operating
Earnings*
|
|
$
1.24
|
|
$
0.76
|
|
$
0.82
|
|
|
*
|
Adjusted operating
earnings (non-GAAP) is defined as net earnings attributable to
International Paper Company (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. 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 and Consolidated Statement of Operations
and related notes included later in this release.
|
|
|
Select Financial
Measures
|
|
(In
millions)
|
|
Second
Quarter
2022
|
|
First
Quarter
2022
|
|
Second
Quarter
2021
|
Net Sales
|
|
$
5,389
|
|
$
5,237
|
|
$
4,770
|
Net Earnings (Loss)
Attributable to International Paper
|
|
511
|
|
360
|
|
432
|
Business Segment
Operating Profit
|
|
585
|
|
348
|
|
390
|
Adjusted
Operating Earnings
|
|
459
|
|
288
|
|
325
|
Cash Provided By (Used
For) Operations
|
|
390
|
|
588
|
|
766
|
Free Cash
Flow*
|
|
204
|
|
403
|
|
633
|
|
|
*
|
Free cash flow is a
non-GAAP financial measure. A reconciliation of free cash flow to
the most comparable GAAP measure, cash provided by (used for)
operations, and disclosure regarding 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 its businesses and is calculated as set
forth in footnote (f) below under "Sales and Earnings by Business
Segment". As a result of the spin-off of our global Printing Papers
business on October 1, 2021, the
Printing Papers business segment has been eliminated and all prior
year amounts have been adjusted to reflect this business as a
discontinued operation. For discussion of discontinued operations,
see the disclosure under Discontinued Operations included later in
this release. Second quarter 2022 net sales by business segment and
operating profit (loss) by business segment compared with the first
quarter of 2022 and the second quarter of 2021 are as follows:
Business Segment
Results
|
|
(In
millions)
|
|
Second
Quarter
2022
|
|
First
Quarter
2022
|
|
Second
Quarter
2021
|
Net Sales by
Business Segment
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
4,491
|
|
$
4,406
|
|
$
4,030
|
Global Cellulose
Fibers
|
|
788
|
|
710
|
|
680
|
Corporate and
Inter-segment Sales
|
|
110
|
|
121
|
|
60
|
Net
Sales
|
|
$
5,389
|
|
$
5,237
|
|
$
4,770
|
Operating Profit
(Loss) by Business Segment
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
560
|
|
$
397
|
|
$
389
|
Global Cellulose
Fibers
|
|
25
|
|
(49)
|
|
1
|
Total Business
Segment Operating Profit
|
|
$
585
|
|
$
348
|
|
$
390
|
Industrial Packaging operating profits (losses) in
the second quarter of 2022 were $560
million compared with $397
million in the first quarter of 2022. In North America, earnings increased driven by
higher sales prices for corrugated boxes and containerboard and
lower planned maintenance outage expenses, partially offset by
higher input costs, primarily for energy and freight. Sales volumes
were stable for corrugated boxes and higher for export
containerboard. Domestic containerboard volumes were lower.
Earnings in the second quarter of 2022 benefited from insurance
recoveries and other one-time items. In Europe, earnings improved reflecting higher
average sales prices in the Eurozone and strong operating
performance partially offset by seasonally lower sales volumes in
Morocco.
Global Cellulose Fibers operating profits (losses) in the
second quarter of 2022 were $25
million compared with $(49)
million in the first quarter of 2022. Earnings improved
significantly driven by higher sales prices for both fluff pulp and
market pulp and lower planned maintenance outage expenses,
partially offset by higher input costs, primarily for energy and
chemicals. Sales volumes were slightly higher. Operating costs were
lower, reflecting improved mill performance and seasonality.
EQUITY METHOD INVESTMENTS
Ilim joint
venture equity earnings (losses) were $95 million in the second quarter of 2022
compared with $93 million in the
first quarter of 2022. Operationally, earnings were stable as
higher sales prices were mostly offset by higher input costs. The
Company continues to actively explore strategic options with
respect to the Ilim joint venture, including a sale of its 50%
ownership interest.
CORPORATE EXPENSES
Corporate expenses were
$27 million for the second quarter of
2022, compared with $12 million in
the first quarter of 2022.
EFFECTIVE TAX RATE
The reported effective tax rate for
the second quarter of 2022 was 19%, compared to a 2022 first
quarter reported effective tax rate of 26%. The effective tax rate
for the second quarter of 2022 was lower due to the tax-free
exchange of a portion of the Company's shares of Sylvamo
Corporation.
Excluding special items and non-operating pension expense, the
operational effective tax rate for the second quarter of 2022 was
25%, compared with 27% for the first quarter of 2022. The
higher operational effective tax rate in the first quarter is
primarily due to reduced tax benefits for equity-based
compensation.
EFFECTS OF SPECIAL ITEMS
Net special items in the
second quarter of 2022 amount to a net after-tax gain of
$17 million ($0.05 per diluted
share) compared with a gain of $35
million ($0.09 per diluted
share) in the first quarter of 2022 and a charge of $55 million ($0.14
per diluted share) in the second quarter of 2021. Net special items
in all periods include the following charges (gains):
|
|
Second Quarter
2022
|
|
First Quarter
2022
|
|
Second Quarter
2021
|
(In
millions)
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
Restructuring and
other charges, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt extinguishment
costs
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
170
|
|
$
128
|
Other
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
3
|
Total restructuring
and other charges, net
|
|
—
|
|
—
|
|
—
|
|
—
|
|
174
|
|
131
|
Environmental
remediation reserve adjustment
|
|
15
|
|
11
|
|
—
|
|
—
|
|
5
|
|
3
|
Sylvamo investment
(a)
|
|
(3)
|
|
(2)
|
|
(46)
|
|
(35)
|
|
—
|
|
—
|
Real estate - office
impairment
|
|
—
|
|
—
|
|
—
|
|
—
|
|
21
|
|
16
|
Gain on sale of equity
investment in Graphic Packaging
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(130)
|
|
(98)
|
EMEA Packaging
impairment - Turkey
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(8)
|
|
(2)
|
Tax benefit related to
exchange of Sylvamo shares (b)
|
|
—
|
|
(31)
|
|
—
|
|
—
|
|
—
|
|
—
|
Other
|
|
6
|
|
5
|
|
—
|
|
—
|
|
7
|
|
5
|
Total special
items, net
|
|
$
18
|
|
$
(17)
|
|
$
(46)
|
|
$
(35)
|
|
$
69
|
|
$
55
|
|
|
(a)
|
See note (b) on the
Consolidated Statement of Operations included later in this
release.
|
(b)
|
See note (c) on the
Consolidated Statement of Operations included later in this
release.
|
DISCONTINUED OPERATIONS
Discontinued operations
include the operating earnings of our former Printing Papers
segment and EMEA Coated Paperboard and Pulp business including the
Kwidzyn, Poland mill, divested in
the third quarter of 2021. Discontinued operations also includes
the following special items charges (gains):
|
|
Second Quarter
2021
|
(In
millions)
|
|
Before
Tax
|
|
After
Tax
|
Printing Papers
spin-off
|
|
24
|
|
20
|
Foreign value-added tax
credit (including interest)
|
|
(70)
|
|
(47)
|
Total
|
|
$
(46)
|
|
$
(27)
|
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 at internationalpaper.com by
clicking on the Performance tab and going to the Presentations and
Events/Webcasts and Presentations page. 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
second quarter earnings call. The conference ID number is 1765705.
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 access code, enter 7062832.
About International Paper
International Paper (NYSE:
IP) is a leading global supplier of renewable fiber-based products.
We produce corrugated packaging products that protect and promote
goods, and enable worldwide commerce, and pulp for diapers, tissue
and other personal care products that promote health and wellness.
Headquartered in Memphis, Tenn.,
we employ approximately 38,000 colleagues globally. We serve
customers worldwide, with manufacturing operations in North America, Latin
America, North Africa and
Europe. Net sales for 2021 were
$19.4 billion. Additional information
can be found by visiting InternationalPaper.com.
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 GHGs and other environmental, social and
governance matters; (ii) the impact of the conflict involving
Russia and Ukraine, including in connection with related
escalated sanctions imposed by the United
States, the European Union, G7 and other countries and
possible actions by the Russian government, and the impact of such
developments on domestic and global economic and geopolitical
conditions in general and on us and our Ilim joint venture, which
could be materially and adversely affected by such developments,
and our inability to predict the full impact of the Russian
invasion of Ukraine, current or
future sanctions, geopolitical instability and the possibility of
broadened military conflict on our Ilim joint venture and on our
receipt of dividends from our Ilim joint venture; (iii) the
possible impact of these developments involving Ukraine and Russia and potential negative capital markets
conditions on the value of and our ability to sell all or a portion
of our equity stake in Sylvamo Corporation and the timing of any
such sales; (iv) the impact of and developments related to the
ongoing COVID-19 pandemic; (v) the level of our indebtedness and
changes in interest rates; (vi) the impact of global and domestic
economic conditions and industry conditions, including with respect
to commercial activity, inflationary pressures and changes in the
cost or availability of raw materials, energy sources and
transportation sources, supply chain shortages and disruptions, the
availability of labor, particularly in light of current labor
market conditions which are exceptionally tight, 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) domestic and global
geopolitical conditions, 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) 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; (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) risks inherent in conducting business through joint
ventures; (xii) our ability to achieve the benefits expected from,
and other risks associated with, acquisitions, joint ventures,
divestitures, spinoffs and other corporate transactions, (xiii)
cybersecurity and information technology risks; (xiv) loss
contingencies and pending, threatened or future litigation,
including with respect to environmental related matters; (xv) our
exposure to claims under our agreements with Sylvamo Corporation;
(xvi) 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 (xvii) 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 SEC filings. 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
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months Ended
June 30,
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2022
|
|
2021
|
|
|
Net
Sales
|
|
$
5,389
|
|
$
4,770
|
|
$
5,237
|
|
$
10,626
|
|
$ 9,363
|
|
|
Costs and
Expenses
|
|
|
|
Cost of products
sold
|
|
3,806
|
(a)
|
3,402
|
(d)
|
3,839
|
|
7,645
|
(a)
|
6,750
|
(d)
|
|
Selling and
administrative expenses
|
|
300
|
|
396
|
(e)
|
341
|
|
641
|
|
698
|
(e)
|
|
Depreciation,
amortization and cost of timber
harvested
|
|
267
|
|
272
|
|
261
|
|
528
|
|
540
|
|
|
Distribution
expenses
|
|
442
|
|
342
|
|
424
|
|
866
|
|
677
|
|
|
Taxes other than
payroll and income taxes
|
|
36
|
|
36
|
|
36
|
|
72
|
|
71
|
|
|
Restructuring and other
charges, net
|
|
—
|
|
174
|
(f)
|
—
|
|
—
|
|
204
|
(f)
|
|
Net (gains) losses on
sales and impairments of businesses
|
|
—
|
|
(9)
|
(g)
|
—
|
|
—
|
|
(7)
|
(g)
|
|
Net (gains) losses on
sales of equity method investments
|
|
—
|
|
(130)
|
(h)
|
—
|
|
—
|
|
(204)
|
(h)
|
|
Net (gains) losses on
mark to market investments
|
|
(3)
|
(b)
|
—
|
|
(46)
|
(b)
|
(49)
|
(b)
|
—
|
|
|
Interest expense,
net
|
|
74
|
|
86
|
|
69
|
|
143
|
|
179
|
|
|
Non-operating pension
expense (income)
|
|
(47)
|
|
(51)
|
|
(49)
|
|
(96)
|
|
(103)
|
|
|
Earnings (Loss) From
Continuing Operations Before Income Taxes and Equity
Earnings
|
|
514
|
|
252
|
|
362
|
|
876
|
|
558
|
|
|
Income tax provision
(benefit)
|
|
96
|
(c)
|
46
|
|
95
|
|
191
|
(c)
|
134
|
|
|
Equity earnings (loss),
net of taxes
|
|
93
|
|
104
|
|
93
|
|
186
|
|
153
|
|
|
Earnings (Loss) From
Continuing Operations
|
|
511
|
|
310
|
|
360
|
|
871
|
|
577
|
|
|
Discontinued
operations, net of taxes
|
|
—
|
|
124
|
(i)
|
—
|
|
—
|
|
206
|
(i)
|
|
Net Earnings
(Loss)
|
|
511
|
|
434
|
|
360
|
|
871
|
|
783
|
|
|
Less: Net earnings
(loss) attributable to noncontrolling interests
|
|
—
|
|
2
|
(j)
|
—
|
|
—
|
|
2
|
(j)
|
|
Net Earnings (Loss)
Attributable to International Paper Company
|
|
$
511
|
|
$
432
|
|
$
360
|
|
$
871
|
|
$
781
|
|
|
Basic Earnings Per
Common Share Attributable to International Paper Common
Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
$
1.39
|
|
$
0.79
|
|
$
0.96
|
|
$
2.34
|
|
$
1.47
|
|
|
Discontinued
operations
|
|
—
|
|
0.31
|
|
—
|
|
—
|
|
0.52
|
|
|
Net earnings
(loss)
|
|
$
1.39
|
|
$
1.10
|
|
$
0.96
|
|
$
2.34
|
|
$
1.99
|
|
|
Diluted Earnings Per
Common Share Attributable to International Paper Common
Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
$
1.38
|
|
$
0.78
|
|
$
0.95
|
|
$
2.32
|
|
$
1.45
|
|
|
Discontinued
operations
|
|
—
|
|
0.31
|
|
—
|
|
—
|
|
0.51
|
|
|
Net earnings
(loss)
|
|
$
1.38
|
|
$
1.09
|
|
$
0.95
|
|
$
2.32
|
|
$
1.96
|
|
|
Average Shares of
Common Stock Outstanding - Diluted
|
|
370.7
|
|
396.8
|
|
379.2
|
|
375.7
|
|
397.7
|
|
|
The accompanying notes
are an integral part of this consolidated statement of
operations.
|
(a)
|
Includes a pre-tax
charge of $15 million ($11 million after taxes) for the three
months and six months ended June 30, 2022 for an environmental
remediation reserve adjustment and a pre-tax charge of $6 million
($5 million after taxes) for the
three months and six months
ended June 30,
2022 for other
costs.
|
(b)
|
Includes pre-tax
net gains of $3 million ($2 million after taxes), $46
million ($35 million after taxes) and $49 million ($37 million
after taxes) for the three months ended June 30, 2022 and March 31,
2022 and the six months ended June 30, 2022, respectively, related
to our investment in Sylvamo
Corporation.
|
(c)
|
Includes a $31 million
tax benefit related to the tax-free exchange of a portion of our
shares of Sylvamo Corporation.
|
(d)
|
Includes a
pre-tax charge of $21 million ($16 million after taxes) for the
three months and six months ended June 30, 2021 related to the
impairment of real estate and a pre-tax charge of $5 million ($3
million after taxes) for the three months and six months ended June
30, 2021 for an environmental remediation reserve
adjustment.
|
(e)
|
Includes a pre-tax
charge of $4 million ($3 million after taxes) for the three months
and six months ended June 30, 2021 for costs associated with our
Building a Better IP initiative and a pre-tax charge of $3
million ($2 million after taxes) for the three months and six
months ended June 30, 2021 for other costs.
|
(f)
|
Includes pre-tax
charges of $170 million ($128 million after taxes) and $188 million
($142 million after taxes) for the three months and six months
ended June 30, 2021, respectively, for debt extinguishment costs, a
pre-tax charge of $12 million ($10 million after taxes) for the six
months ended June 30, 2021 for severance related to the
optimization of our EMEA Packaging business and a pre-tax charge of
$4 million ($3 million after taxes) for the three months and six
months ended June 30, 2021 for other costs.
|
(g)
|
Includes a net pre-tax
gain of $9 million ($3 million after taxes) and $7 million ($1
million after taxes) for the three months and six months ended June
30, 2021 related to the sale of our EMEA Packaging business in
Turkey.
|
(h)
|
Includes pre-tax gains
of $130 million ($98 million after taxes) and $204 million ($154
million after taxes) for the three months and six months ended June
30, 2021 related to the monetization of our equity investment in
Graphic Packaging.
|
(i)
|
Includes pre-tax
charges of $24 million ($20 million after taxes) and $49 million
($40 million after taxes) for the three months and six months ended
June 30, 2021, respectively, for costs associated with the spin-off
of our Printing Papers business and pre-tax income of $70 million
($47 million after taxes) for the three months and six months ended
June 30, 2021 for the accrual of a foreign value-added tax credit
which transferred to Sylvamo Corporation effective with the
spin-off on October 1, 2021.
|
(j)
|
Includes the allocation
of income to noncontrolling interest of $1 million (before and
after taxes) for the three months and six months ended June 30,
2021 associated with the sale of our EMEA Packaging business in
Turkey.
|
|
INTERNATIONAL PAPER
COMPANY Reconciliation
of Net Earnings (Loss) Attributable to International Paper Company
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,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2022
|
|
2021
|
|
Net Earnings (Loss)
Attributable to International Paper Company
|
|
$
511
|
|
$
432
|
|
$
360
|
|
$
871
|
|
$
781
|
|
Less: Discontinued
operations (gain) loss
|
|
—
|
|
(124)
|
|
—
|
|
—
|
|
(206)
|
|
Earnings (Loss) from
Continuing Operations Attributable to International Paper
Company
|
|
511
|
|
308
|
|
360
|
|
871
|
|
575
|
|
Add back: Non-operating
pension expense (income)
|
|
(35)
|
|
(38)
|
|
(37)
|
|
(72)
|
|
(77)
|
|
Add back: Net Special
items expense (income)
|
|
(17)
|
|
55
|
|
(35)
|
|
(52)
|
|
25
|
|
Adjusted Operating
Earnings
|
|
$
459
|
|
$
325
|
|
$
288
|
|
$
747
|
|
$
523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months Ended
June 30,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2022
|
|
2021
|
|
Diluted Earnings per
Common Share as Reported
|
|
$
1.38
|
|
$
1.09
|
|
$
0.95
|
|
$
2.32
|
|
$
1.96
|
|
Less: Discontinued
operations (gain) loss
|
|
—
|
|
(0.31)
|
|
—
|
|
—
|
|
(0.51)
|
|
Continuing
Operations
|
|
1.38
|
|
0.78
|
|
0.95
|
|
2.32
|
|
1.45
|
|
Add back: Non-operating
pension expense (income)
|
|
(0.09)
|
|
(0.10)
|
|
(0.10)
|
|
(0.19)
|
|
(0.19)
|
|
Add back: Net Special
items expense (income)
|
|
(0.05)
|
|
0.14
|
|
(0.09)
|
|
(0.14)
|
|
0.06
|
|
Adjusted Operating
Earnings per Share
|
|
$
1.24
|
|
$
0.82
|
|
$
0.76
|
|
$
1.99
|
|
$
1.32
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. generally accepted accounting principles ("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. The Company believes that using this
information, along with net earnings, provides for a more complete
analysis of the results of operations by quarter. Net earnings
(loss) attributable to International Paper is the most directly
comparable GAAP measure.
|
|
|
|
|
|
|
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 Sales and
Earnings by Business Segment Preliminary and Unaudited (In millions)
|
|
|
Net Sales by
Business Segment
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2022
|
|
2021
|
|
|
|
Industrial
Packaging
|
|
$
4,491
|
|
$ 4,030
|
|
$
4,406
|
|
$ 8,897
|
|
$
7,960
|
|
|
|
Global Cellulose
Fibers
|
|
788
|
|
680
|
|
710
|
|
1,498
|
|
1,275
|
|
|
|
Corporate and
Inter-segment Sales
|
|
110
|
|
60
|
|
121
|
|
231
|
|
128
|
|
|
|
Net
Sales
|
|
$
5,389
|
|
$ 4,770
|
|
$
5,237
|
|
$
10,626
|
|
$
9,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
(Loss) by Business Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2022
|
|
2021
|
|
|
|
Industrial
Packaging
|
|
$
560
|
|
$
389
|
|
$
397
|
|
$
957
|
|
$ 810
|
|
|
|
Global Cellulose
Fibers
|
|
25
|
|
1
|
|
(49)
|
|
(24)
|
|
(80)
|
|
|
|
Total Business
Segment Operating Profit
|
|
$
585
|
|
$
390
|
|
$
348
|
|
$
933
|
|
$ 730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss)
Before Income Taxes and Equity Earnings
|
|
514
|
|
252
|
|
362
|
|
876
|
|
558
|
|
|
|
Interest expense,
net
|
|
74
|
|
86
|
|
69
|
|
143
|
|
179
|
|
|
|
Noncontrolling interest
adjustment (e)
|
|
(1)
|
|
(1)
|
(b)
|
-
|
|
(1)
|
|
(2)
|
(b)
|
|
|
Corporate expenses,
net
|
|
27
|
|
36
|
|
12
|
|
39
|
|
72
|
|
|
|
Corporate net special
items
|
|
18
|
(a)
|
77
|
(c)
|
(46)
|
(a)
|
(28)
|
(a)
|
21
|
(c)
|
|
|
Business net special
items
|
|
—
|
|
(9)
|
(d)
|
—
|
|
—
|
|
5
|
(d)
|
|
|
Non-operating pension
expense (income)
|
|
(47)
|
|
(51)
|
|
(49)
|
|
(96)
|
|
(103)
|
|
|
|
Business Segment
Operating Profit (f)
|
|
$
585
|
|
$
390
|
|
$
348
|
|
$
933
|
|
$ 730
|
|
|
|
Equity Earnings
(Loss) in Ilim S.A., Net of Taxes
|
|
$
95
|
|
$
101
|
|
$
93
|
|
$
188
|
|
$ 150
|
|
|
|
Equity Earnings
(Loss) in Graphic Packaging International Partners,
LLC
|
|
$
-
|
|
$
3
|
|
$
-
|
|
$
-
|
|
$
4
|
|
|
|
|
(a)
|
Includes net gains of
$3 million, $46 million and $49 million for the three months ended
June 30, 2022 and March 31, 2022 and the six months ended June 30,
2022, respectively, related to our investment in Sylvamo
Corporation, a charge of $15 million for the three months and six
months ended June 30, 2022 for an environmental remediation reserve
adjustment and a charge of $6 million for the three months and six
months ended June 30, 2022 for other costs.
|
(b)
|
Includes the allocation
of income to noncontrolling interest of $1 million for the three
months and six months ended June 30, 2021 associated with the sale
of our EMEA Packaging business in Turkey.
|
(c)
|
Includes charges of
$170 million and $188 million for the three months and six months
ended June 30, 2021, respectively, for debt extinguishment costs, a
charge of $4 million for the three months and six months ended June
30, 2021 for costs associated with our Building a Better IP
initiative, a charge of $21 million for the three months and six
months ended June 30, 2021 related to the impairment of real
estate, a charge of $5 million for the three months and six months
ended June 30, 2021 for an environmental remediation reserve
adjustment, gains of $130 million and $204 million for the three
months and six months ended June 30, 2021, respectively, related to
the monetization of our equity investment in Graphic Packaging and
a charge of $7 million for the three months and six months ended
June 30, 2021 for other costs.
|
(d)
|
Related to Industrial
Packaging, includes a net gain of $9 million and $7 million for the
three months and six months ended June 30, 2021, respectively,
partially offset by the allocation of gain to noncontrolling
interest of $1 million for the three months and six months ended
June 30, 2021 related to the sale of our EMEA Packaging business in
Turkey and a charge of $12 million for the six months ended June
30, 2021 for severance related to the optimization of our EMEA
Packaging business.
|
(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 noncontrolling interest 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 noncontrolling
interests, 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 and 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
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months Ended
June 30,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2022
|
|
2021
|
|
Industrial Packaging
(In thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
|
Corrugated Packaging
(b)
|
|
2,619
|
|
2,733
|
|
2,618
|
|
5,237
|
|
5,417
|
|
Containerboard
|
|
707
|
|
699
|
|
712
|
|
1,419
|
|
1,408
|
|
Recycling
|
|
535
|
|
568
|
|
564
|
|
1,099
|
|
1,126
|
|
Saturated
Kraft
|
|
51
|
|
50
|
|
44
|
|
95
|
|
95
|
|
Gypsum /Release
Kraft
|
|
64
|
|
68
|
|
54
|
|
118
|
|
123
|
|
EMEA Packaging
(b)
|
|
354
|
|
410
|
|
368
|
|
722
|
|
845
|
|
Industrial
Packaging
|
|
4,330
|
|
4,528
|
|
4,360
|
|
8,690
|
|
9,014
|
|
Global Cellulose Fibers
(In thousands of metric tons) (c)
|
|
720
|
|
743
|
|
712
|
|
1,432
|
|
1,498
|
|
|
(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)
|
|
|
June 30,
2022
|
|
December 31,
2021
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and Temporary
Investments
|
|
$
826
|
|
$
1,295
|
Accounts and Notes
Receivable, Net
|
|
3,462
|
|
3,232
|
Contract
Assets
|
|
506
|
|
378
|
Inventories
|
|
1,897
|
|
1,814
|
Current
Investments
|
|
151
|
|
245
|
Other
|
|
204
|
|
132
|
Total Current
Assets
|
|
7,046
|
|
7,096
|
Plants, Properties and
Equipment, Net
|
|
10,234
|
|
10,441
|
Investments
|
|
930
|
|
751
|
Long-Term Financial
Assets of Variable Interest Entities
|
|
2,284
|
|
2,275
|
Goodwill
|
|
3,124
|
|
3,130
|
Overfunded Pension Plan
Assets
|
|
713
|
|
595
|
Right of Use
Assets
|
|
383
|
|
365
|
Deferred Charges and
Other Assets
|
|
568
|
|
590
|
Total
Assets
|
|
$
25,282
|
|
$
25,243
|
Liabilities and
Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Notes Payable and
Current Maturities of Long-Term Debt
|
|
$
293
|
|
$
196
|
Accounts Payable and
Other Current Liabilities
|
|
4,059
|
|
3,948
|
Total Current
Liabilities
|
|
4,352
|
|
4,144
|
Long-Term
Debt
|
|
5,275
|
|
5,383
|
Long-Term Nonrecourse
Financial Liabilities of Variable Interest Entities
|
|
2,103
|
|
2,099
|
Deferred Income
Taxes
|
|
2,614
|
|
2,618
|
Underfunded Pension
Benefit Obligation
|
|
364
|
|
377
|
Postretirement and
Postemployment Benefit Obligation
|
|
194
|
|
205
|
Long-Term Lease
Obligations
|
|
245
|
|
236
|
Other
Liabilities
|
|
1,092
|
|
1,099
|
Equity
|
|
|
|
|
Common Stock
|
|
449
|
|
449
|
Paid-in
Capital
|
|
4,675
|
|
4,668
|
Retained
Earnings
|
|
9,557
|
|
9,029
|
Accumulated Other
Comprehensive Loss
|
|
(1,489)
|
|
(1,666)
|
|
|
13,192
|
|
12,480
|
Less: Common Stock Held
in Treasury, at Cost
|
|
4,149
|
|
3,398
|
Total Equity
|
|
9,043
|
|
9,082
|
Total Liabilities
and Equity
|
|
$
25,282
|
|
$
25,243
|
INTERNATIONAL PAPER
COMPANY Consolidated Statement of Cash
Flows
Preliminary and Unaudited
(In millions)
|
|
Six Months Ended
June 30,
|
|
2022
|
|
2021
|
Operating
Activities
|
|
|
|
Net earnings
(loss)
|
$
871
|
|
$
783
|
Depreciation,
amortization and cost of timber harvested
|
528
|
|
615
|
Deferred income tax
expense (benefit), net
|
(5)
|
|
5
|
Restructuring and other
charges, net
|
—
|
|
204
|
Net (gains) losses on
mark to market investments
|
(49)
|
|
—
|
Net (gains) losses on
sales and impairments of businesses
|
—
|
|
(7)
|
Net (gains) losses on
sales of equity method investments
|
—
|
|
(204)
|
Equity method dividends
received
|
204
|
|
149
|
Equity (earnings)
losses, net
|
(186)
|
|
(153)
|
Periodic pension
(income) expense, net
|
(58)
|
|
(57)
|
Other, net
|
72
|
|
71
|
Changes in current
assets and liabilities
|
|
|
|
Accounts and notes
receivable
|
(276)
|
|
(496)
|
Contract
assets
|
(129)
|
|
(62)
|
Inventories
|
(133)
|
|
110
|
Accounts payable and
accrued liabilities
|
199
|
|
367
|
Interest
payable
|
3
|
|
(2)
|
Other
|
(63)
|
|
(45)
|
Cash Provided By
(Used For) Operating Activities
|
978
|
|
1,278
|
Investment
Activities
|
|
|
|
Invested in capital
projects, net of insurance recoveries
|
(371)
|
|
(222)
|
Acquisitions, net of
cash acquired
|
—
|
|
(80)
|
Proceeds from sales of
equity method investments
|
—
|
|
800
|
Proceeds from sales of
businesses, net of cash divested
|
—
|
|
90
|
Proceeds from exchange
of equity securities
|
144
|
|
—
|
Proceeds from sale of
fixed assets
|
11
|
|
—
|
Other
|
(1)
|
|
(2)
|
Cash Provided By
(Used For) Investment Activities
|
(217)
|
|
586
|
Financing
Activities
|
|
|
|
Repurchases of common
stock and payments of restricted stock tax withholding
|
(823)
|
|
(213)
|
Issuance of
debt
|
232
|
|
4
|
Reduction of
debt
|
(243)
|
|
(914)
|
Change in book
overdrafts
|
(47)
|
|
2
|
Dividends
paid
|
(344)
|
|
(403)
|
Net debt tender
premiums paid
|
—
|
|
(188)
|
Other
|
(1)
|
|
(3)
|
Cash Provided By
(Used for) Financing Activities
|
(1,226)
|
|
(1,715)
|
Cash Included in
Assets Held for Sale
|
—
|
|
(45)
|
Effect of Exchange
Rate Changes on Cash and Temporary Investments
|
(4)
|
|
7
|
Change in Cash and
Temporary Investments
|
(469)
|
|
111
|
Cash and Temporary
Investments
|
|
|
|
Beginning of the
period
|
1,295
|
|
595
|
End of the
period
|
$
826
|
|
$
706
|
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,
|
|
|
|
|
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Cash Provided By
(Used For) Operating Activities
|
$
390
|
|
$
766
|
|
$
978
|
|
$
1,278
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash invested in
capital projects, net of insurance recoveries
|
(186)
|
|
(133)
|
|
(371)
|
|
(222)
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
$
204
|
|
$
633
|
|
$
607
|
|
$
1,056
|
|
|
|
|
|
|
|
|
|
Free cash flow is a
non-GAAP 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.
|
|
|
|
|
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.
|
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SOURCE International Paper