MEMPHIS,
Tenn., July 27, 2023 /PRNewswire/
-- International Paper (NYSE: IP) today reported second
quarter 2023 financial results.
SECOND QUARTER 2023 HIGHLIGHTS
- Net earnings of $235 million
($0.68 per diluted share); Adjusted
operating earnings* (non-GAAP) of $204
million ($0.59 per diluted
share)
- $55 million of earnings
achieved from Building a Better IP initiatives, bringing
year-to-date to $120 million
- Cash provided by operations of $528
million, bringing year-to-date to $873 million; Free cash flow** (non-GAAP) of
$265 million year-to-date
2023
- Returned $200 million to
shareholders through $40 million
share repurchases and $160 million in
dividends, bringing year-to-date to $519
million
"In the second quarter, the operations of International Paper
continued to run well and we managed our businesses effectively in
a challenging demand environment," said Mark Sutton, Chairman and Chief Executive
Officer. "We continued to advance our Building a Better IP
initiatives, including our commercial improvement and cost
management opportunities. The benefits of that work and our strong
financial foundation position International Paper well as we
navigate the current economic environment."
Diluted Net EPS and
Adjusted Operating EPS
|
|
|
|
|
|
Second
Quarter
2023
|
|
First
Quarter
2023
|
|
Second
Quarter
2022
|
|
Net Earnings
(Loss)
|
|
$
0.68
|
|
$
0.49
|
|
$
1.38
|
|
Less – Discontinued
Operations (Gain) Loss, Net of Taxes
|
|
(0.04)
|
|
—
|
|
(0.25)
|
|
Net Earnings (Loss)
from Continuing Operations
|
|
0.64
|
|
0.49
|
|
1.13
|
|
Add Back –
Non-Operating Pension Expense (Income)
|
|
0.03
|
|
0.04
|
|
(0.13)
|
|
Add Back – Net Special
Items Expense (Income)
|
|
(0.02)
|
|
0.01
|
|
0.05
|
|
Income Taxes -
Non-Operating Pension and Special Items
|
|
(0.06)
|
|
(0.01)
|
|
(0.06)
|
|
Adjusted Operating
Earnings*
|
|
$
0.59
|
|
$
0.53
|
|
$
0.99
|
|
|
|
*
|
Adjusted operating
earnings (non-GAAP) is defined as net earnings (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, Net of Taxes and
Consolidated Statement of Operations and related notes included
later in this release.
|
Select Financial
Measures
|
|
|
|
(In
millions)
|
|
Second
Quarter
2023
|
|
First
Quarter
2023
|
|
Second
Quarter
2022
|
|
Net Sales
|
|
$
4,682
|
|
$
5,020
|
|
$
5,389
|
|
Net Earnings
(Loss)
|
|
235
|
|
172
|
|
511
|
|
Business Segment
Operating Profit (Loss)
|
|
334
|
|
306
|
|
585
|
|
Adjusted
Operating Earnings
|
|
204
|
|
185
|
|
364
|
|
Cash Provided By (Used
For) Operations
|
|
528
|
|
345
|
|
390
|
|
Free Cash
Flow**
|
|
261
|
|
4
|
|
204
|
|
|
|
**
|
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 (d) below
under "Sales and Earnings by Business Segment". Second quarter 2023
net sales by business segment and operating profit (loss) by
business segment compared with the first quarter of 2023 and the
second quarter of 2022 are as follows:
Business Segment
Results
|
|
|
|
(In
millions)
|
|
Second
Quarter
2023
|
|
First
Quarter
2023
|
|
Second
Quarter
2022
|
|
Net Sales by
Business Segment
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
3,884
|
|
$
4,083
|
|
$
4,491
|
|
Global Cellulose
Fibers
|
|
698
|
|
811
|
|
788
|
|
Corporate and
Inter-segment Sales
|
|
100
|
|
126
|
|
110
|
|
Net
Sales
|
|
$
4,682
|
|
$
5,020
|
|
$
5,389
|
|
Operating Profit
(Loss) by Business Segment
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
304
|
|
$
322
|
|
$
560
|
|
Global Cellulose
Fibers
|
|
30
|
|
(16)
|
|
25
|
|
Total Business
Segment Operating Profit (Loss)
|
|
$
334
|
|
$
306
|
|
$
585
|
|
Industrial Packaging operating profits (losses) in
the second quarter of 2023 were $304
million compared with $322
million in the first quarter of 2023. In North America, earnings decreased on lower
sales prices in a continued soft demand environment for corrugated
boxes and containerboard as customer inventory destocking
continued. The demand environment resulted in additional economic
downtime driving higher operating costs that more than offset lower
planned maintenance outage costs and input costs, primarily for
energy, freight and wood. In EMEA, earnings were flat as lower
energy costs were offset by seasonally lower volumes and lower
sales prices for containerboard.
Global Cellulose Fibers operating profits (losses) in the
second quarter of 2023 were $30
million compared with $(16)
million in the first quarter of 2023. Earnings improved in
spite of lower sales of fluff pulp and decreased pulp pricing in a
challenging global market environment impacted by customer
inventory destocking as supply chain conditions improved. The
earnings improvement was driven by lower operating costs, planned
maintenance costs and input costs, primarily for chemicals and
energy.
EQUITY METHOD INVESTMENT - ILIM JOINT
VENTURE
On January 24, 2023, the Company
announced an agreement to sell its investment in the Ilim joint
venture, subject to regulatory approvals. The Company initially
recognized an impairment charge of $533
million including approximately $375
million foreign currency cumulative translation adjustment
loss in the fourth quarter of 2022. Through the second quarter of
2023, the Company recognized an additional $76 million impairment charge.
Equity earnings (losses), excluding impairment, were
$46 million in the second quarter of
2023 compared with $43 million in the
first quarter of 2023. The current period and historical results
have been adjusted to reflect Ilim as a discontinued operation and
our investment balance, following the adjustment to fair value and
resulting impairment charges, is included in Assets Held for
Sale.
CORPORATE EXPENSES
Corporate expenses, net was an expense of $8 million for both the second quarter of 2023
and the first quarter of 2023.
EFFECTIVE TAX RATE
The reported effective tax rate for the second quarter of 2023
was 13%, compared to a first quarter of 2023 reported effective tax
rate of 22%. The lower tax rate in the second quarter reflects a
tax benefit related to the closure of the 2015-2016 IRS audit (see
special items table below).
Excluding special items and non-operating pension expense, the
operational effective tax rate was 22% for both the second quarter
of 2023 and the first quarter of 2023.
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 more meaningful comparison
of the income tax rate between past and present periods.
EFFECTS OF SPECIAL ITEMS
Net special items in the second quarter of 2023 amount to a net
after-tax gain of $27 million
($0.08 per diluted share) compared
with a charge of $2 million
($0.01 per diluted share) in the
first quarter of 2023 and a benefit of $17
million ($0.05 per diluted
share) in the second quarter of 2022. Net special items in all
periods include the following charges (gains):
|
|
Second Quarter
2023
|
|
First Quarter
2023
|
|
Second Quarter
2022
|
(In
millions)
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
Environmental
remediation reserve adjustment
|
|
—
|
|
—
|
|
—
|
|
—
|
|
15
|
|
11
|
Interest related to the
timber monetization settlement (a)
|
|
—
|
|
—
|
|
3
|
|
2
|
|
—
|
|
—
|
Interest related to
settlement of tax audits
|
|
(6)
|
|
(4)
|
|
—
|
|
—
|
|
—
|
|
—
|
Sylvamo investment
(b)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3)
|
|
(2)
|
Tax benefit related to
settlement of tax audits
|
|
—
|
|
(23)
|
|
—
|
|
—
|
|
—
|
|
—
|
Tax benefit related to
exchange of Sylvamo shares (b)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(31)
|
Other
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
5
|
Total special
items, net
|
|
$
(6)
|
|
$
(27)
|
|
$
3
|
|
$
2
|
|
$
18
|
|
$
(17)
|
|
|
(a)
|
See note (a) on the
Consolidated Statement of Operations included later in this
release.
|
(b)
|
See notes (e) and (f)
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):
|
|
Second Quarter
2023
|
|
First Quarter
2023
|
(In
millions)
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
Ilim equity method
investment impairment
|
|
$
33
|
|
$
33
|
|
$
43
|
|
$
43
|
Total
|
|
$
33
|
|
$
33
|
|
$
43
|
|
$
43
|
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 internationalpaper.com. 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) 207-6975 or, within the U.S. only,
(844) 867-6169, and ask to be connected to the International Paper
second quarter earnings call. The conference ID number is 5174623.
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 3300533.
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.
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 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, 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) 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, current or future actions by the Russian
government, geopolitical instability and the possibility of
broadened military conflict on our Ilim joint venture, on our
receipt of dividends from our Ilim joint venture and on our ability
to complete the sale of our interest in the Ilim joint venture
under the terms of the agreement with our joint venture partners to
purchase our interest (and, if we are unable to complete such a
sale, on the value of and our ability to sell our interest to
another purchaser); (ix) risks inherent in conducting business
through joint ventures; (x) our ability to achieve the benefits
expected from, and other risks associated with, acquisitions, joint
ventures, divestitures, spinoffs and other corporate transactions,
(xi) cybersecurity and information technology risks; (xii) loss
contingencies and pending, threatened or future litigation,
including with respect to environmental related matters; (xiii) our
exposure to claims under our agreements with Sylvamo Corporation;
(xiv) 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 (xv) 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 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,
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
Net Sales
|
|
$
4,682
|
|
$ 5,389
|
|
$
5,020
|
|
$
9,702
|
|
$ 10,626
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
3,360
|
|
3,806
|
(d)
|
3,642
|
|
7,002
|
|
7,645
|
(d)
|
|
Selling and
administrative expenses
|
|
336
|
|
300
|
|
381
|
|
717
|
|
641
|
|
|
Depreciation,
amortization and cost of timber
harvested
|
|
244
|
|
267
|
|
241
|
|
485
|
|
528
|
|
|
Distribution
expenses
|
|
376
|
|
442
|
|
422
|
|
798
|
|
866
|
|
|
Taxes other than
payroll and income taxes
|
|
40
|
|
36
|
|
36
|
|
76
|
|
72
|
|
|
Net (gains) losses on
mark to market investments
|
|
—
|
|
(3)
|
(e)
|
—
|
|
—
|
|
(49)
|
(e)
|
|
Interest expense,
net
|
|
59
|
(a)
|
74
|
|
62
|
(a)
|
121
|
(a)
|
143
|
|
|
Non-operating pension
expense (income)
|
|
12
|
|
(47)
|
|
15
|
|
27
|
|
(96)
|
|
|
Earnings (Loss) From Continuing Operations Before
Income Taxes and Equity Earnings
|
|
255
|
|
514
|
|
221
|
|
476
|
|
876
|
|
|
Income tax provision
(benefit)
|
|
33
|
(b)
|
96
|
(f)
|
48
|
|
81
|
(b)
|
191
|
(f)
|
|
Equity earnings
(loss), net of taxes
|
|
—
|
|
(2)
|
|
(1)
|
|
(1)
|
|
(2)
|
|
|
Earnings (Loss) From Continuing
Operations
|
|
222
|
|
416
|
|
172
|
|
394
|
|
683
|
|
|
Discontinued
operations, net of taxes
|
|
13
|
(c)
|
95
|
|
—
|
(c)
|
13
|
(c)
|
188
|
|
|
Net Earnings (Loss)
|
|
$
235
|
|
$
511
|
|
$
172
|
|
$ 407
|
|
$ 871
|
|
|
Basic Earnings Per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
$
0.64
|
|
$
1.13
|
|
$
0.49
|
|
$ 1.13
|
|
$ 1.83
|
|
|
Discontinued
operations, net of taxes
|
|
0.04
|
|
0.26
|
|
—
|
|
0.04
|
|
0.51
|
|
|
Net earnings
(loss)
|
|
$
0.68
|
|
$
1.39
|
|
$
0.49
|
|
$ 1.17
|
|
$ 2.34
|
|
|
Diluted Earnings Per Common
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
$
0.64
|
|
$
1.13
|
|
$
0.49
|
|
$ 1.12
|
|
$ 1.82
|
|
|
Discontinued
operations, net of taxes
|
|
0.04
|
|
0.25
|
|
—
|
|
0.04
|
|
0.50
|
|
|
Net earnings
(loss)
|
|
$
0.68
|
|
$
1.38
|
|
$
0.49
|
|
$ 1.16
|
|
$ 2.32
|
|
|
Average Shares of Common Stock Outstanding -
Diluted
|
|
346.5
|
|
370.7
|
|
353.3
|
|
349.5
|
|
375.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of this consolidated statement of
operations.
|
(a)
|
Includes income of $6
million ($4 million after taxes) for the three months and six
months ended June 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 three months ended March 31, 2023 and
the six months ended June 30, 2023 related to the previously
announced settlement of the timber monetization restructuring tax
matter.
|
(b)
|
Includes a tax benefit
of $23 million for the three months and six months ended June 30,
2023 related to the settlement of tax audits.
|
(c)
|
Includes charges of $33
million (before and after taxes), $43 million (before and after
taxes) and $76 million (before and after taxes) for the three
months ended June 30, 2023 and March 31, 2023 and the six months
ended June 30, 2023, respectively, for the impairment of our equity
method investment in connection with our announced plan to sell our
interest in the Ilim joint venture.
|
(d)
|
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.
|
(e)
|
Includes pre-tax gains
of $3 million ($2 million after taxes) and $49 million ($37 million
after taxes) for the three months and six months ended June 30,
2022 related to the fair value adjustment of our investment in
Sylvamo Corporation.
|
(f)
|
Includes a $31 million
tax benefit for the three months and six months ended June 30, 2022
related to the tax-free exchange of a portion 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
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
June 30,
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
Net Earnings (Loss)
|
|
$
235
|
|
$
511
|
|
$
172
|
|
$
407
|
|
$
871
|
|
|
Less: Discontinued
operations, net of taxes (gain) loss
|
|
(13)
|
|
(95)
|
|
—
|
|
(13)
|
|
(188)
|
|
|
Earnings (Loss) from Continuing
Operations
|
|
222
|
|
416
|
|
172
|
|
394
|
|
683
|
|
|
Add back: Non-operating
pension expense (income)
|
|
12
|
|
(47)
|
|
15
|
|
27
|
|
(96)
|
|
|
Add back: Net special
items expense (income)
|
|
(6)
|
|
18
|
|
3
|
|
(3)
|
|
(28)
|
|
|
Income taxes -
Non-operating pension and special items
|
|
(24)
|
|
(23)
|
|
(5)
|
|
(29)
|
|
—
|
|
|
Adjusted Operating Earnings
|
|
$
204
|
|
$
364
|
|
$
185
|
|
$
389
|
|
$
559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
June 30,
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
Diluted Earnings per Common Share as
Reported
|
|
$
0.68
|
|
$ 1.38
|
|
$
0.49
|
|
$
1.16
|
|
$ 2.32
|
|
|
Less: Discontinued
operations, net of taxes (gain) loss
|
|
(0.04)
|
|
(0.25)
|
|
—
|
|
(0.04)
|
|
(0.50)
|
|
|
Continuing Operations
|
|
0.64
|
|
1.13
|
|
0.49
|
|
1.12
|
|
1.82
|
|
|
Add back: Non-operating
pension expense (income)
|
|
0.03
|
|
(0.13)
|
|
0.04
|
|
0.08
|
|
(0.26)
|
|
|
Add back: Net special
items expense (income)
|
|
(0.02)
|
|
0.05
|
|
0.01
|
|
(0.01)
|
|
(0.07)
|
|
|
Income taxes per share
- Non-operating pension and special items
|
|
(0.06)
|
|
(0.06)
|
|
(0.01)
|
|
(0.08)
|
|
—
|
|
|
Adjusted Operating Earnings per
Share
|
|
$
0.59
|
|
$ 0.99
|
|
$
0.53
|
|
$
1.11
|
|
$ 1.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) 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,
|
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
|
|
Industrial
Packaging
|
$ 3,884
|
|
$ 4,491
|
|
$
4,083
|
|
$
7,967
|
|
$
8,897
|
|
|
|
|
Global Cellulose
Fibers
|
698
|
|
788
|
|
811
|
|
1,509
|
|
1,498
|
|
|
|
|
Corporate and
Inter-segment Sales
|
100
|
|
110
|
|
126
|
|
226
|
|
231
|
|
|
|
|
Net Sales
|
$ 4,682
|
|
$ 5,389
|
|
$
5,020
|
|
$
9,702
|
|
$
10,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit (Loss) by Business
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
|
|
|
Industrial
Packaging
|
$
304
|
|
$
560
|
|
$
322
|
|
$ 626
|
|
$ 957
|
|
|
|
|
Global Cellulose
Fibers
|
30
|
|
25
|
|
(16)
|
|
14
|
|
(24)
|
|
|
|
|
Total Business Segment Operating Profit
(Loss)
|
$
334
|
|
$
585
|
|
$
306
|
|
$ 640
|
|
$ 933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) Before Income Taxes and Equity
Earnings
|
255
|
|
514
|
|
221
|
|
476
|
|
876
|
|
|
|
|
Interest expense,
net
|
59
|
(a)
|
74
|
|
62
|
(a)
|
121
|
(a)
|
143
|
|
|
|
|
Adjustment for less
than wholly owned subsidiaries (c)
|
—
|
|
(1)
|
|
—
|
|
—
|
|
(1)
|
|
|
|
|
Corporate expenses,
net
|
8
|
|
27
|
|
8
|
|
16
|
|
39
|
|
|
|
|
Corporate net special
items
|
—
|
|
18
|
(b)
|
—
|
|
—
|
|
(28)
|
(b)
|
|
|
|
Non-operating pension
expense (income)
|
12
|
|
(47)
|
|
15
|
|
27
|
|
(96)
|
|
|
|
|
Business Segment Operating Profit (Loss)
(d)
|
$
334
|
|
$
585
|
|
$
306
|
|
$ 640
|
|
$ 933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes income of $6
million for the three months and six months ended June 30, 2023 for
interest income associated with the settlement of tax audits and a
charge of $3 million for the three months ended March 31, 2023 and
six months ended June 30, 2023 related to the previously announced
settlement of the timber monetization restructuring tax
matter.
|
|
|
(b)
|
Includes net gains of
$3 million and $49 million for the three months and 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.
|
|
|
(c)
|
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.
|
|
|
(d)
|
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 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,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2023
|
|
2022
|
|
Industrial Packaging
(In thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
Corrugated Packaging
(b)
|
2,393
|
|
2,619
|
|
2,381
|
|
4,774
|
|
5,237
|
|
Containerboard
|
600
|
|
707
|
|
544
|
|
1,144
|
|
1,419
|
|
Recycling
|
528
|
|
535
|
|
560
|
|
1,088
|
|
1,099
|
|
Saturated
Kraft
|
44
|
|
51
|
|
34
|
|
78
|
|
95
|
|
Gypsum /Release
Kraft
|
61
|
|
64
|
|
60
|
|
121
|
|
118
|
|
EMEA Packaging
(b)
|
317
|
|
354
|
|
335
|
|
652
|
|
722
|
|
Industrial
Packaging
|
3,943
|
|
4,330
|
|
3,914
|
|
7,857
|
|
8,690
|
|
Global Cellulose Fibers
(In thousands of metric tons) (c)
|
625
|
|
720
|
|
688
|
|
1,313
|
|
1,432
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2023
|
|
December 31, 2022
|
Assets
|
|
|
|
Current Assets
|
|
|
|
Cash and Temporary
Investments
|
$
746
|
|
$
804
|
Accounts and Notes
Receivable, Net
|
3,140
|
|
3,284
|
Contract
Assets
|
490
|
|
481
|
Inventories
|
1,911
|
|
1,942
|
Assets Held for
Sale
|
30
|
|
133
|
Other
|
159
|
|
126
|
Total Current
Assets
|
6,476
|
|
6,770
|
Plants, Properties and
Equipment, Net
|
10,473
|
|
10,431
|
Investments
|
183
|
|
186
|
Long-Term Financial
Assets of Variable Interest Entities
|
2,303
|
|
2,294
|
Goodwill
|
3,043
|
|
3,041
|
Overfunded Pension Plan
Assets
|
315
|
|
297
|
Right of Use
Assets
|
449
|
|
424
|
Deferred Charges and
Other Assets
|
441
|
|
497
|
Total Assets
|
$
23,683
|
|
$
23,940
|
Liabilities and Equity
|
|
|
|
Current Liabilities
|
|
|
|
Notes Payable and
Current Maturities of Long-Term Debt
|
248
|
|
763
|
Accounts Payable and
Other Current Liabilities
|
3,819
|
|
4,237
|
Total Current
Liabilities
|
4,067
|
|
5,000
|
Long-Term
Debt
|
5,572
|
|
4,816
|
Long-Term Nonrecourse
Financial Liabilities of Variable Interest Entities
|
2,110
|
|
2,106
|
Deferred Income
Taxes
|
1,735
|
|
1,732
|
Underfunded Pension
Benefit Obligation
|
283
|
|
281
|
Postretirement and
Postemployment Benefit Obligation
|
139
|
|
150
|
Long-Term Lease
Obligations
|
304
|
|
283
|
Other
Liabilities
|
1,069
|
|
1,075
|
Equity
|
|
|
|
Common
Stock
|
449
|
|
449
|
Paid-in
Capital
|
4,688
|
|
4,725
|
Retained
Earnings
|
9,938
|
|
9,855
|
Accumulated Other
Comprehensive Loss
|
(1,920)
|
|
(1,925)
|
|
13,155
|
|
13,104
|
Less: Common Stock
Held in Treasury, at Cost
|
4,751
|
|
4,607
|
Total
Equity
|
8,404
|
|
8,497
|
Total Liabilities and Equity
|
$
23,683
|
|
$
23,940
|
|
|
|
|
INTERNATIONAL PAPER COMPANY
Consolidated Statement of Cash Flows Preliminary and
Unaudited
(In millions)
|
|
Six Months Ended June 30,
|
|
2023
|
|
2022
|
Operating Activities
|
|
|
|
Net earnings
(loss)
|
$
407
|
|
$
871
|
Depreciation,
amortization and cost of timber harvested
|
485
|
|
528
|
Deferred income tax
expense (benefit), net
|
(13)
|
|
(5)
|
Net (gains) losses on
mark to market investments
|
—
|
|
(49)
|
Net (gains) losses on
sales and impairments of equity method investments
|
76
|
|
—
|
Equity method
dividends received
|
13
|
|
204
|
Equity (earnings)
losses, net of taxes
|
(88)
|
|
(186)
|
Periodic pension
(income) expense, net
|
47
|
|
(58)
|
Other, net
|
34
|
|
72
|
Changes in current
assets and liabilities
|
|
|
|
Accounts and notes
receivable
|
160
|
|
(276)
|
Contract
assets
|
(9)
|
|
(129)
|
Inventories
|
87
|
|
(133)
|
Accounts payable and
accrued liabilities
|
(280)
|
|
199
|
Interest
payable
|
(23)
|
|
3
|
Other
|
(23)
|
|
(63)
|
Cash Provided By (Used For) Operating
Activities
|
873
|
|
978
|
Investment Activities
|
|
|
|
Invested in capital
projects, net of insurance recoveries
|
(608)
|
|
(371)
|
Proceeds from exchange
of equity securities
|
—
|
|
144
|
Proceeds from sale of
fixed assets
|
3
|
|
11
|
Other
|
2
|
|
(1)
|
Cash Provided By (Used For) Investment
Activities
|
(603)
|
|
(217)
|
Financing Activities
|
|
|
|
Repurchases of common
stock and payments of restricted stock tax withholding
|
(218)
|
|
(823)
|
Issuance of
debt
|
772
|
|
232
|
Reduction of
debt
|
(536)
|
|
(243)
|
Change in book
overdrafts
|
(33)
|
|
(47)
|
Dividends
paid
|
(322)
|
|
(344)
|
Other
|
(1)
|
|
(1)
|
Cash Provided By (Used for) Financing
Activities
|
(338)
|
|
(1,226)
|
Effect of Exchange Rate Changes on Cash and Temporary
Investments
|
10
|
|
(4)
|
Change in Cash and Temporary
Investments
|
(58)
|
|
(469)
|
Cash and Temporary Investments
|
|
|
|
Beginning of the
period
|
804
|
|
1,295
|
End of the
period
|
$
746
|
|
$
826
|
|
|
|
|
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,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
Cash Provided By (Used For) Operating
Activities
|
$
528
|
|
$
390
|
|
$
873
|
|
$
978
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Cash invested in
capital projects, net of insurance recoveries
|
(267)
|
|
(186)
|
|
(608)
|
|
(371)
|
|
|
Free Cash Flow
|
$
261
|
|
$
204
|
|
$
265
|
|
$
607
|
|
|
|
|
|
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