MEMPHIS,
Tenn., Feb. 1, 2024 /PRNewswire/ -- International
Paper (NYSE: IP) today reported full-year and fourth quarter 2023
financial results.
FULL-YEAR AND FOURTH QUARTER 2023 HIGHLIGHTS
- Full-year net earnings (loss) of $288
million ($0.82 per diluted
share); Fourth quarter net earnings (loss) of $(284) million ($(0.82) per diluted share); Full-year and fourth
quarter net earnings include a pre-tax charge of $540 million related to mill strategic
actions
- Full-year adjusted operating earnings (non-GAAP) of
$755 million ($2.16 per diluted share); Fourth quarter adjusted
operating earnings (non-GAAP) of $142
million ($0.41 per diluted
share)
- Full-year earnings benefit from Building a Better IP
initiatives of $260 million,
exceeding annual target
- Full-year cash provided by operations of $1.8 billion and returned $839 million to shareholders in share repurchases
and dividends
- Full-year capital investments of $1.1
billion, including investments in packaging for future
growth
"In 2023, the International Paper team demonstrated our agility
by navigating through challenging market conditions,'' said
Mark Sutton, Chairman and Chief
Executive Officer. "We executed well and delivered $260 million of Building a Better IP benefits,
while accelerating cost reduction efforts across our operations and
supply chain. Although earnings were impacted by lower demand and
cost inflation, we executed strategic actions to further optimize
our mill system and invest in the future growth of our packaging
business. We also returned $839
million to our shareowners."
"As we enter 2024," Sutton added, "we remain committed to
creating value for our customers and shareowners. We see demand
growth across the markets we serve. Because our Building a Better
IP mindset is embedded into our culture, we will continue to
accelerate our commercial strategies and drive operational
excellence to improve profitability."
Diluted Net EPS and
Adjusted Operating EPS
|
|
|
|
Fourth
Quarter
2023
|
|
Third
Quarter
2023
|
|
Fourth
Quarter
2022
|
|
Full-Year
2023
|
|
Full-Year
2022
|
Net Earnings
(Loss)
|
|
$
(0.82)
|
|
$
0.47
|
|
$
(0.90)
|
|
$
0.82
|
|
$
4.10
|
Less – Discontinued
Operations (Gain) Loss, Net of Taxes
|
|
—
|
|
0.08
|
|
1.38
|
|
0.04
|
|
0.64
|
Net Earnings (Loss)
from Continuing Operations
|
|
(0.82)
|
|
0.55
|
|
0.48
|
|
0.86
|
|
4.74
|
Add Back –
Non-Operating Pension Expense (Income)
|
|
0.04
|
|
0.04
|
|
(0.13)
|
|
0.15
|
|
(0.52)
|
Add Back – Net Special
Items Expense (Income)
|
|
1.58
|
|
0.08
|
|
0.41
|
|
1.64
|
|
0.63
|
Income Taxes -
Non-Operating Pension and Special Items
|
|
(0.39)
|
|
(0.03)
|
|
0.11
|
|
(0.49)
|
|
(1.67)
|
Adjusted Operating
Earnings*
|
|
$
0.41
|
|
$
0.64
|
|
$
0.87
|
|
$
2.16
|
|
$
3.18
|
*
|
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)
|
|
Fourth
Quarter
2023
|
|
Third
Quarter
2023
|
|
Fourth
Quarter
2022
|
|
Full-Year
2023
|
|
Full-Year
2022
|
Net Sales
|
|
$
4,601
|
|
$
4,613
|
|
$
5,133
|
|
$
18,916
|
|
$
21,161
|
Net Earnings
(Loss)
|
|
(284)
|
|
165
|
|
(318)
|
|
288
|
|
1,504
|
Business Segment
Operating Profit (Loss)
|
|
257
|
|
352
|
|
451
|
|
1,249
|
|
1,848
|
Adjusted
Operating Earnings
|
|
142
|
|
224
|
|
309
|
|
755
|
|
1,168
|
Cash Provided By (Used
For) Operations
|
|
492
|
|
468
|
|
761
|
|
1,833
|
|
2,174
|
Free Cash
Flow**
|
|
187
|
|
240
|
|
439
|
|
692
|
|
1,243
|
**
|
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 an
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 (h) below under "Sales and Earnings by
Business Segment". Fourth quarter 2023 net sales by business
segment and operating profit (loss) by business segment compared
with the third quarter of 2023 and the fourth quarter of 2022 along
with full-year 2023 net sales by business segment and operating
profit (loss) by business segment compared with full-year 2022 are
as follows:
Business Segment
Results
|
|
(In
millions)
|
|
Fourth
Quarter
2023
|
|
Third
Quarter
2023
|
|
Fourth
Quarter
2022
|
|
Full-Year
2023
|
|
Full-Year
2022
|
Net Sales by
Business Segment
|
|
|
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
3,842
|
|
$
3,787
|
|
$
4,169
|
|
$
15,596
|
|
$
17,451
|
Global Cellulose
Fibers
|
|
656
|
|
725
|
|
842
|
|
2,890
|
|
3,227
|
Corporate and
Inter-segment Sales
|
|
103
|
|
101
|
|
122
|
|
430
|
|
483
|
Net
Sales
|
|
$
4,601
|
|
$
4,613
|
|
$
5,133
|
|
$
18,916
|
|
$
21,161
|
Operating Profit
(Loss) by Business Segment
|
|
|
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
315
|
|
$
325
|
|
$
416
|
|
$
1,266
|
|
$
1,742
|
Global Cellulose
Fibers
|
|
(58)
|
|
27
|
|
35
|
|
(17)
|
|
106
|
Total Business
Segment Operating Profit (Loss)
|
|
$
257
|
|
$
352
|
|
$
451
|
|
$
1,249
|
|
$
1,848
|
Industrial Packaging operating profits (losses) in
the fourth quarter of 2023 were $315
million compared with $325
million in the third quarter of 2023. In North America, earnings were lower as higher
sales volumes for containerboard, lower planned outage costs and
lower economic downtime were more than offset by lower sales prices
for containerboard and corrugated boxes, an unfavorable geographic
mix and the non-repeat of favorable adjustments related to employee
benefit costs in the third quarter of 2023. Input costs were
slightly higher, as higher recovered fiber costs were mostly offset
by lower energy and other raw material costs. In EMEA, earnings
were higher, driven by seasonally higher volumes and a favorable
product mix. EMEA earnings also benefited from an energy subsidy
and other favorable one-time items in the fourth quarter of
2023.
Global Cellulose Fibers operating profits (losses) in the
fourth quarter of 2023 were $(58)
million compared with $27
million in the third quarter of 2023. Earnings were impacted
by lower pulp pricing, partially offset by an improved product mix.
Earnings were also impacted by higher planned outage costs and the
non-repeat of favorable adjustments related to employee benefit
costs in the third quarter of 2023. Sales volumes improved and
economic downtime was lower, reflecting continued market
improvement. Input costs were lower, primarily for wood and
chemicals.
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 a
benefit of $9 million for the fourth
quarter of 2023 compared with expense of $20
million in the third quarter of 2023.
EFFECTIVE TAX RATE
The reported effective tax rate for
the fourth quarter of 2023 was 19%, compared to 17% in the third
quarter of 2023. The fourth quarter tax benefit is primarily driven
by the impact of the mill strategic actions.
The operational effective tax rate was 34% for the fourth
quarter of 2023 compared to 18% in the third quarter of 2023. The
higher operational effective tax rate is a result of U.S. federal
income tax benefits recorded in the third quarter as well as an
increased deferred tax valuation allowance in the fourth
quarter.
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
fourth quarter of 2023 amount to a net after-tax charge of
$415 million ($1.20 per diluted share) compared with a charge
of $22 million ($0.06 per diluted share) in the third quarter of
2023 and a charge of $174 million
($0.49 per diluted share) in the
fourth quarter of 2022. Net special items in all periods include
the following charges (gains):
|
|
Fourth Quarter
2023
|
|
Third Quarter
2023
|
|
Fourth Quarter
2022
|
(In
millions)
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
Restructuring and
other charges, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other
costs (a)
|
|
$
118
|
|
$
89
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
Building a Better
IP
|
|
(19)
|
|
(14)
|
|
—
|
|
—
|
|
—
|
|
—
|
Other
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4)
|
|
(3)
|
Total restructuring
and other charges, net
|
|
99
|
|
75
|
|
—
|
|
—
|
|
(4)
|
|
(3)
|
Accelerated
depreciation (a)
|
|
422
|
|
317
|
|
—
|
|
—
|
|
—
|
|
—
|
Environmental
remediation reserve adjustment
|
|
7
|
|
5
|
|
29
|
|
22
|
|
48
|
|
36
|
Equity method
investment impairment
|
|
18
|
|
14
|
|
—
|
|
—
|
|
—
|
|
—
|
EMEA Packaging goodwill
impairment
|
|
—
|
|
—
|
|
—
|
|
—
|
|
76
|
|
76
|
Legal reserve
adjustments
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11
|
|
8
|
Foreign currency
cumulative translation loss related to sale of equity method
investment
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10
|
|
10
|
Tax expense related to
legal entity restructuring
|
|
—
|
|
4
|
|
—
|
|
—
|
|
—
|
|
—
|
Foreign deferred tax
valuation allowance
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
45
|
Interest related to the
timber monetization settlement
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
|
2
|
Total special
items, net
|
|
$
546
|
|
$
415
|
|
$
29
|
|
$
22
|
|
$
144
|
|
$
174
|
|
|
(a)
|
Amounts associated with
mill strategic actions. See notes (b) and (c) 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 prior Ilim joint venture. Discontinued operations, net of
taxes also includes the following special items charges
(gains):
|
|
Third Quarter
2023
|
|
Fourth Quarter
2022
|
(In
millions)
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
Ilim equity method
investment impairment and transaction costs
|
|
$
59
|
|
$
50
|
|
$
533
|
|
$
533
|
Total
|
|
$
59
|
|
$
50
|
|
$
533
|
|
$
533
|
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 (409) 207-6995 or, within the U.S. only,
(844) 291-5494, and ask to be connected to the International Paper
full-year and fourth quarter earnings call. The conference ID
number is 3266705. 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 9191047.
About International Paper
International Paper (NYSE:
IP) is a global producer of sustainable packaging, pulp and other
fiber-based products, and one of the world'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 2023 were $18.9 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 full-year and fourth 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.
Forward-looking statements can be identified by the use of
forward-looking or conditional words such as "expects,"
"anticipates," "believes," "estimates," "could," "should," "can,"
"forecast," "intend," "look," "may," "will," "remain," "confident,"
"commit" and "plan" or similar expressions. These statements are
not guarantees of future performance and reflect management's
current views and speak only as to the dates the statements are
made 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, risks associated with our variable rate
debt, 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; (iv) risks arising from conducting business
internationally, 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) the costs of
compliance, or the failure to comply with, existing and new
environmental (including with respect to climate change and GHG
emissions), 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) our ability to realize expected benefits and cost
savings associated with restructuring initiatives; (ix) our ability
to achieve the benefits expected from, and other risks associated
with, acquisitions, joint ventures, divestitures, spinoffs, capital
investments 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
December 31,
|
|
Three Months Ended
September 30,
|
|
Twelve Months Ended
December 31,
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
Net Sales
|
|
$
4,601
|
|
$
5,133
|
|
$
4,613
|
|
$
18,916
|
|
$
21,161
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
3,282
|
(a)
|
3,668
|
(h)
|
3,345
|
(a)
|
13,629
|
(a)
|
15,143
|
(h)
|
|
Selling and
administrative expenses
|
|
357
|
|
315
|
|
286
|
|
1,360
|
|
1,293
|
|
|
Depreciation,
amortization and cost of timber harvested
|
|
689
|
(b)
|
251
|
|
258
|
|
1,432
|
(b)
|
1,040
|
|
|
Distribution
expenses
|
|
395
|
|
446
|
|
382
|
|
1,575
|
|
1,783
|
|
|
Taxes other than
payroll and income taxes
|
|
39
|
|
38
|
|
39
|
|
154
|
|
148
|
|
|
Restructuring and
other charges, net
|
|
99
|
(c)
|
(4)
|
(i)
|
—
|
|
99
|
(c)
|
89
|
(i)
|
|
Net (gains) losses on
sales and impairments of businesses
|
|
—
|
|
76
|
(j)
|
—
|
|
—
|
|
76
|
(j)
|
|
Net (gains) losses on
sales of equity method investments
|
|
—
|
|
10
|
(k)
|
—
|
|
—
|
|
10
|
(k)
|
|
Net (gains) losses on
mark to market investments
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(65)
|
(l)
|
|
Interest expense,
net
|
|
52
|
|
59
|
(m)
|
58
|
|
231
|
(d)
|
325
|
(m)
|
|
Non-operating pension
expense (income)
|
|
14
|
|
(48)
|
|
13
|
|
54
|
|
(192)
|
|
|
Earnings (Loss) From Continuing Operations Before
Income Taxes and Equity Earnings (Loss)
|
|
(326)
|
|
322
|
|
232
|
|
382
|
|
1,511
|
|
|
Income tax provision
(benefit)
|
|
(61)
|
(e)
|
148
|
(n)
|
39
|
|
59
|
(e)
|
(236)
|
(n)
|
|
Equity earnings
(loss), net of taxes
|
|
(19)
|
(f)
|
(3)
|
|
(1)
|
|
(21)
|
(f)
|
(6)
|
|
|
Earnings (Loss) From Continuing
Operations
|
|
(284)
|
|
171
|
|
192
|
|
302
|
|
1,741
|
|
|
Discontinued
operations, net of taxes
|
|
—
|
|
(489)
|
(o)
|
(27)
|
(g)
|
(14)
|
(g)
|
(237)
|
(o)
|
|
Net Earnings (Loss)
|
|
$ (284)
|
|
$
(318)
|
|
$
165
|
|
$
288
|
|
$ 1,504
|
|
|
Basic Earnings Per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
$
(0.82)
|
|
$
0.48
|
|
$
0.55
|
|
$
0.87
|
|
$ 4.79
|
|
|
Discontinued
operations, net of taxes
|
|
—
|
|
(1.38)
|
|
(0.08)
|
|
(0.04)
|
|
(0.65)
|
|
|
Net earnings
(loss)
|
|
$
(0.82)
|
|
$
(0.90)
|
|
$
0.47
|
|
$
0.83
|
|
$ 4.14
|
|
|
Diluted Earnings Per Common
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
$
(0.82)
|
|
$
0.48
|
|
$
0.55
|
|
$
0.86
|
|
$ 4.74
|
|
|
Discontinued
operations, net of taxes
|
|
—
|
|
(1.38)
|
|
(0.08)
|
|
(0.04)
|
|
(0.64)
|
|
|
Net earnings
(loss)
|
|
$
(0.82)
|
|
$
(0.90)
|
|
$
0.47
|
|
$
0.82
|
|
$ 4.10
|
|
|
Average Shares of Common Stock Outstanding -
Diluted
|
|
346.0
|
|
353.7
|
|
348.1
|
|
349.1
|
|
367.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of this Consolidated Statement of
Operations.
|
|
|
|
(a)
|
Includes pre-tax
charges of $7 million ($5 million after taxes), $29 million ($22
million after taxes) and $36 million ($27 million after taxes) for
the three months ended December 31, 2023 and September 30, 2023 and
the twelve months ended December 31, 2023, respectively, for
environmental remediation reserve adjustments.
|
|
|
|
(b)
|
Includes a pre-tax
charge of $422 million ($317 million after taxes) for the three
months and twelve months ended December 31, 2023 for accelerated
depreciation associated with the permanent closure of our
containerboard mill in Orange, Texas and the permanent shutdown of
pulp machines at our Riegelwood, North Carolina and Pensacola,
Florida mills.
|
|
|
|
(c)
|
Includes a pre-tax
charge of $118 million ($89 million after taxes) for the three
months and twelve months ended December 31, 2023 for costs
associated with the permanent closure of our containerboard mill in
Orange, Texas and the permanent shutdown of pulp machines at our
Riegelwood, North Carolina and Pensacola, Florida mills and pre-tax
income of $19 million ($14 million after taxes) for the three
months and twelve months ended December 31, 2023 for the revision
of severance estimates related to our Building a Better IP
initiative.
|
|
|
|
(d)
|
Includes pre-tax income
of $6 million ($4 million after taxes) for the twelve months ended
December 31, 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 twelve months ended December 31, 2023
related to the previously announced settlement of the timber
monetization restructuring tax matter.
|
|
|
|
(e)
|
Includes tax expense of
$4 million for the three months and twelve months ended December
31, 2023 related to internal legal entity restructuring and a tax
benefit of $23 million for the twelve months ended December 31,
2023 related to the settlement of tax audits.
|
|
|
|
(f)
|
Includes a pre-tax
charge of $18 million ($14 million after taxes) for the three
months and twelve months ended December 31, 2023 for the
other-than-temporary impairment of an equity method
investment.
|
|
|
|
(g)
|
Includes charges of $59
million ($50 million after taxes) and $135 million ($126 million
after taxes) for the three months ended September 30, 2023 and the
twelve months ended December 31, 2023, respectively, for impairment
and transaction costs related to our former equity method
investment in the Ilim joint venture.
|
|
|
|
(h)
|
Includes pre-tax
charges of $48 million ($36 million after taxes) and $63 million
($47 million after taxes) for the three months and twelve months
ended December 31, 2022, respectively, for environmental
remediation reserve adjustments, a pre-tax charge of $11 million
($8 million after taxes) for the three months and twelve months
ended December 31, 2022 for a litigation reserve, pre-tax income of
$15 million ($11 million after taxes) for the twelve months ended
December 31, 2022 for a legal settlement and a pre-tax charge of $6
million ($5 million after taxes) for the twelve months ended
December 31, 2022 for other costs.
|
|
|
|
(i)
|
Includes a pre-tax
charge of $93 million ($70 million after taxes) for the twelve
months ended December 31, 2022 for debt extinguishment costs and
other pre-tax income of $4 million ($3 million after taxes) for the
three months and twelve months ended December 31, 2022.
|
|
|
|
(j)
|
Includes a charge of
$76 million (before and after taxes) for the three months and
twelve months ended December 31, 2022 related to the impairment of
goodwill in our EMEA Packaging business.
|
|
|
|
(k)
|
Includes a loss of $10
million (before and after taxes) for the three months and twelve
months ended December 31, 2022 for the foreign currency cumulative
translation adjustment related to the sale of an equity method
investment.
|
|
|
|
(l)
|
Includes a pre-tax net
gain of $65 million ($49 million after taxes) for the twelve months
ended December 31, 2022 related to the monetization of our
investment in Sylvamo Corporation.
|
|
|
|
(m)
|
Includes pre-tax
charges of $3 million ($2 million after taxes) and $58 million ($43
million after taxes) for the three months and twelve months ended
December 31, 2022, respectively, related to the previously
announced settlement of the timber monetization restructuring tax
matter.
|
|
|
|
(n)
|
Includes tax expense of
$45 million for the three months and twelve months ended December
31, 2022 related to a foreign deferred tax valuation allowance, a
tax benefit of $604 million for the twelve months ended December
31, 2022 related to the previously announced settlement of the
timber monetization restructuring tax matter and a tax benefit of
$66 million for the twelve months ended December 31, 2022 related
to the tax-free exchange of our shares of Sylvamo
Corporation.
|
|
|
|
(o)
|
Includes a charge of
$533 million (before and after taxes) for the three months and
twelve months ended December 31, 2022 for the impairment of our
equity method investment in connection with our announced plan to
sell our interest in the Ilim joint venture.
|
|
|
|
|
INTERNATIONAL PAPER COMPANY
Reconciliation of Net Earnings (Loss) to Adjusted Operating
Earnings Preliminary and Unaudited
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Three Months Ended
September 30,
|
|
Twelve Months Ended
December 31,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
Net Earnings (Loss)
|
$
(284)
|
|
$
(318)
|
|
$
165
|
|
$
288
|
|
$ 1,504
|
|
|
Less: Discontinued
operations, net of taxes (gain) loss
|
—
|
|
489
|
|
27
|
|
14
|
|
237
|
|
|
Earnings (Loss) from Continuing
Operations
|
(284)
|
|
171
|
|
192
|
|
302
|
|
1,741
|
|
|
Add back: Non-operating
pension expense (income)
|
14
|
|
(48)
|
|
13
|
|
54
|
|
(192)
|
|
|
Add back: Net special
items expense (income)
|
546
|
|
144
|
|
29
|
|
572
|
|
233
|
|
|
Income taxes -
Non-operating pension and special items
|
(134)
|
|
42
|
|
(10)
|
|
(173)
|
|
(614)
|
|
|
Adjusted Operating Earnings
|
$
142
|
|
$
309
|
|
$
224
|
|
$
755
|
|
$ 1,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Three Months Ended
September 30,
|
|
Twelve Months Ended
December 31,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
Diluted Earnings per Common Share as
Reported
|
$
(0.82)
|
|
$ (0.90)
|
|
$
0.47
|
|
$
0.82
|
|
$
4.10
|
|
|
Less: Discontinued
operations, net of taxes (gain) loss
|
—
|
|
1.38
|
|
0.08
|
|
0.04
|
|
0.64
|
|
|
Continuing Operations
|
(0.82)
|
|
0.48
|
|
0.55
|
|
0.86
|
|
4.74
|
|
|
Add back: Non-operating
pension expense (income)
|
0.04
|
|
(0.13)
|
|
0.04
|
|
0.15
|
|
(0.52)
|
|
|
Add back: Net special
items expense (income)
|
1.58
|
|
0.41
|
|
0.08
|
|
1.64
|
|
0.63
|
|
|
Income taxes per share
- Non-operating pension and special items
|
(0.39)
|
|
0.11
|
|
(0.03)
|
|
(0.49)
|
|
(1.67)
|
|
|
Adjusted Operating Earnings per
Share
|
$
0.41
|
|
$
0.87
|
|
$
0.64
|
|
$
2.16
|
|
$
3.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, twelve-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
December 31,
|
|
Three Months Ended
September 30,
|
|
Twelve Months Ended
December 31,
|
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
|
|
Industrial
Packaging
|
$ 3,842
|
|
$ 4,169
|
|
$
3,787
|
|
$
15,596
|
|
$
17,451
|
|
|
|
|
Global Cellulose
Fibers
|
656
|
|
842
|
|
725
|
|
2,890
|
|
3,227
|
|
|
|
|
Corporate and
Inter-segment Sales
|
103
|
|
122
|
|
101
|
|
430
|
|
483
|
|
|
|
|
Net Sales
|
$ 4,601
|
|
$ 5,133
|
|
$
4,613
|
|
$
18,916
|
|
$
21,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit (Loss) by Business
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Three Months Ended
September 30,
|
|
Twelve Months Ended
December 31,
|
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
|
|
Industrial
Packaging
|
$
315
|
|
$
416
|
|
$
325
|
|
$
1,266
|
|
$
1,742
|
|
|
|
|
Global Cellulose
Fibers
|
(58)
|
|
35
|
|
27
|
|
(17)
|
|
106
|
|
|
|
|
Total Business Segment Operating Profit
(Loss)
|
$
257
|
|
$
451
|
|
$
352
|
|
$
1,249
|
|
$
1,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) Before Income Taxes and Equity
Earnings
|
(326)
|
|
322
|
|
232
|
|
382
|
|
1,511
|
|
|
|
|
Interest expense,
net
|
52
|
|
59
|
(d)
|
58
|
|
231
|
(a)
|
325
|
(d)
|
|
|
|
Adjustment for less
than wholly owned subsidiaries (g)
|
(2)
|
|
(3)
|
|
—
|
|
(2)
|
|
(5)
|
|
|
|
|
Corporate expenses,
net
|
(9)
|
|
(20)
|
|
20
|
|
27
|
|
34
|
|
|
|
|
Corporate net special
items
|
(1)
|
(b)
|
65
|
(e)
|
29
|
(b)
|
28
|
(b)
|
99
|
(e)
|
|
|
|
Business net special
items
|
529
|
(c)
|
76
|
(f)
|
—
|
|
529
|
(c)
|
76
|
(f)
|
|
|
|
Non-operating pension
expense (income)
|
14
|
|
(48)
|
|
13
|
|
54
|
|
(192)
|
|
|
|
|
Business Segment Operating Profit (Loss)
(h)
|
$
257
|
|
$
451
|
|
$
352
|
|
$
1,249
|
|
$
1,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes income of $6
million for the twelve months ended December 31, 2023 for interest
income associated with the settlement of tax audits and a charge of
$3 million for the twelve months ended December 31, 2023 related to
the previously announced settlement of the timber monetization
restructuring tax matter.
|
|
|
(b)
|
Includes charges of $7
million, $29 million and $36 million for the three months ended
December 31, 2023 and September 30, 2023 and the twelve months
ended December 31, 2023, respectively, for environmental
remediation reserve adjustments and income of $8 million for the
three months and twelve months ended December 31, 2023 for the
revision of severance estimates related to our Building a Better IP
initiative.
|
|
|
(c)
|
Related to Industrial
Packaging, includes a charge of $428 million for the three months
and twelve months ended December 31, 2023 for accelerated
depreciation, severance and other costs associated with the
permanent closure of our containerboard mill in Orange, Texas and
income of $8 million for the three months and twelve months ended
December 31, 2023 for the revision of severance estimates related
to our Building a Better IP initiative.
|
|
|
|
Related to Global
Cellulose Fibers, includes a charge of $112 million for the three
months and twelve months ended December 31, 2023 for accelerated
depreciation, severance and other costs associated with the
permanent shutdown of pulp machines at our Riegelwood, North
Carolina and Pensacola, Florida mills and income of $3 million for
the three months and twelve months ended December 31, 2023 for the
revision of severance estimates related to our Building a Better IP
initiative.
|
|
|
(d)
|
Includes charges of $3
million and $58 million for the three months and twelve months
ended December 31, 2022, respectively, related to the previously
announced settlement of the timber monetization restructuring tax
matter.
|
|
|
(e)
|
Includes charges of $48
million and $63 million for the three months and twelve months
ended December 31, 2022, respectively, for environmental
remediation reserve adjustments, a charge of $11 million for the
three months and twelve months ended December 31, 2022 for a
litigation reserve, a loss of $10 million for the three months and
twelve months ended December 31, 2022 for the foreign currency
cumulative translation adjustment related to the sale of an equity
method investment, a charge of $93 million for the twelve months
ended December 31, 2022 for debt extinguishment costs, a net gain
of $65 million for the twelve months ended December 31, 2022
related to the monetization of our investment in Sylvamo
Corporation, income of $15 million for the twelve months ended
December 31, 2022 for a legal settlement and other income of $4
million and a charge of $2 million for the three months and twelve
months ended December 31, 2022, respectively.
|
|
|
(f)
|
Related to Industrial
Packaging, includes a charge of $76 million for the three months
and twelve months ended December 31, 2022 related to the impairment
of goodwill in our EMEA Packaging business.
|
|
|
(g)
|
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.
|
|
|
(h)
|
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
December 31,
|
|
Three Months Ended
September 30,
|
|
Twelve Months Ended
December 31,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
Industrial Packaging
(In thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
|
Corrugated Packaging
(b)
|
2,325
|
|
2,443
|
|
2,329
|
|
9,428
|
|
10,202
|
|
|
Containerboard
|
783
|
|
546
|
|
677
|
|
2,604
|
|
2,642
|
|
|
Recycling
|
535
|
|
545
|
|
529
|
|
2,152
|
|
2,190
|
|
|
Saturated
Kraft
|
42
|
|
42
|
|
40
|
|
160
|
|
188
|
|
|
Gypsum /Release
Kraft
|
58
|
|
67
|
|
58
|
|
237
|
|
251
|
|
|
EMEA Packaging
(b)
|
331
|
|
342
|
|
299
|
|
1,282
|
|
1,376
|
|
|
Industrial
Packaging
|
4,074
|
|
3,985
|
|
3,932
|
|
15,863
|
|
16,849
|
|
|
Global Cellulose Fibers
(In thousands of metric tons) (c)
|
676
|
|
711
|
|
692
|
|
2,681
|
|
2,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
|
December 31, 2023
|
|
December 31, 2022
|
Assets
|
|
|
|
|
Current Assets
|
|
|
|
|
Cash and Temporary
Investments
|
|
$
1,113
|
|
$
804
|
Accounts and Notes
Receivable, Net
|
|
3,059
|
|
3,284
|
Contract
Assets
|
|
433
|
|
481
|
Inventories
|
|
1,889
|
|
1,942
|
Assets Held for
Sale
|
|
—
|
|
133
|
Other
|
|
114
|
|
126
|
Total Current
Assets
|
|
6,608
|
|
6,770
|
Plants, Properties and
Equipment, Net
|
|
10,150
|
|
10,431
|
Investments
|
|
163
|
|
186
|
Long-Term Financial
Assets of Variable Interest Entities
|
|
2,312
|
|
2,294
|
Goodwill
|
|
3,041
|
|
3,041
|
Overfunded Pension Plan
Assets
|
|
118
|
|
297
|
Right of Use
Assets
|
|
448
|
|
424
|
Deferred Charges and
Other Assets
|
|
421
|
|
497
|
Total Assets
|
|
$
23,261
|
|
$
23,940
|
Liabilities and Equity
|
|
|
|
|
Current Liabilities
|
|
|
|
|
Notes Payable and
Current Maturities of Long-Term Debt
|
|
138
|
|
763
|
Accounts Payable and
Other Current Liabilities
|
|
3,821
|
|
4,237
|
Total Current
Liabilities
|
|
3,959
|
|
5,000
|
Long-Term
Debt
|
|
5,455
|
|
4,816
|
Long-Term Nonrecourse
Financial Liabilities of Variable Interest Entities
|
|
2,113
|
|
2,106
|
Deferred Income
Taxes
|
|
1,552
|
|
1,732
|
Underfunded Pension
Benefit Obligation
|
|
280
|
|
281
|
Postretirement and
Postemployment Benefit Obligation
|
|
140
|
|
150
|
Long-Term Lease
Obligations
|
|
312
|
|
283
|
Other
Liabilities
|
|
1,095
|
|
1,075
|
Equity
|
|
|
|
|
Common
Stock
|
|
449
|
|
449
|
Paid-in
Capital
|
|
4,730
|
|
4,725
|
Retained
Earnings
|
|
9,491
|
|
9,855
|
Accumulated Other
Comprehensive Loss
|
|
(1,565)
|
|
(1,925)
|
|
|
13,105
|
|
13,104
|
Less: Common Stock
Held in Treasury, at Cost
|
|
4,750
|
|
4,607
|
Total
Equity
|
|
8,355
|
|
8,497
|
Total Liabilities and Equity
|
|
$
23,261
|
|
$
23,940
|
|
|
|
|
|
INTERNATIONAL PAPER COMPANY
Consolidated Statement of Cash Flows Preliminary and
Unaudited
(In millions)
|
|
|
Twelve Months Ended December
31,
|
|
|
2023
|
|
2022
|
Operating Activities
|
|
|
|
|
Net earnings
(loss)
|
|
$
288
|
|
$
1,504
|
Depreciation,
amortization and cost of timber harvested
|
|
1,432
|
|
1,040
|
Deferred income tax
expense (benefit), net
|
|
(156)
|
|
(773)
|
Restructuring and
other charges, net
|
|
99
|
|
89
|
Periodic pension
(income) expense, net
|
|
94
|
|
(116)
|
Net (gains) losses on
mark to market investments
|
|
—
|
|
(65)
|
Net (gains) losses on
sales and impairments of businesses
|
|
—
|
|
76
|
Net (gains) losses on
sales and impairments of equity method investments
|
|
153
|
|
543
|
Equity method
dividends received
|
|
13
|
|
204
|
Equity (earnings)
losses, net of taxes
|
|
(108)
|
|
(291)
|
Other, net
|
|
20
|
|
108
|
Changes in current
assets and liabilities
|
|
|
|
|
Accounts and notes
receivable
|
|
255
|
|
(59)
|
Contract
assets
|
|
48
|
|
(103)
|
Inventories
|
|
73
|
|
(162)
|
Accounts payable and
accrued liabilities
|
|
(402)
|
|
110
|
Interest
payable
|
|
(19)
|
|
41
|
Other
|
|
43
|
|
28
|
Cash Provided By (Used For) Operating
Activities
|
|
1,833
|
|
2,174
|
Investment Activities
|
|
|
|
|
Invested in capital
projects, net of insurance recoveries
|
|
(1,141)
|
|
(931)
|
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
|
|
13
|
Other
|
|
(3)
|
|
(1)
|
Cash Provided By (Used For) Investment
Activities
|
|
(668)
|
|
(608)
|
Financing Activities
|
|
|
|
|
Repurchases of common
stock and payments of restricted stock tax withholding
|
|
(218)
|
|
(1,284)
|
Issuance of
debt
|
|
783
|
|
1,011
|
Reduction of
debt
|
|
(780)
|
|
(1,017)
|
Change in book
overdrafts
|
|
(8)
|
|
1
|
Dividends
paid
|
|
(642)
|
|
(673)
|
Net debt tender
premiums paid
|
|
—
|
|
(89)
|
Other
|
|
(1)
|
|
(3)
|
Cash Provided By (Used for) Financing
Activities
|
|
(866)
|
|
(2,054)
|
Effect of Exchange Rate Changes on Cash and Temporary
Investments
|
|
10
|
|
(3)
|
Change in Cash and Temporary
Investments
|
|
309
|
|
(491)
|
Cash and Temporary Investments
|
|
|
|
|
Beginning of the
period
|
|
804
|
|
1,295
|
End of the
period
|
|
$
1,113
|
|
$
804
|
|
|
|
|
|
INTERNATIONAL PAPER COMPANY
Reconciliation of Cash Provided by Operations to Free Cash
Flow Preliminary and Unaudited
(In millions)
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
Cash Provided By (Used For) Operating
Activities
|
$
492
|
|
$
761
|
|
$
1,833
|
|
$
2,174
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Cash invested in
capital projects, net of insurance recoveries
|
(305)
|
|
(322)
|
|
(1,141)
|
|
(931)
|
|
|
Free Cash Flow
|
$
187
|
|
$
439
|
|
$
692
|
|
$
1,243
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
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