International Paper (IP) Q3 2024 earnings summary

Executive summary

• Q3 2024 net earnings were $150 million ($0.42 per diluted share), with adjusted operating earnings of $153 million ($0.44 per share), as higher prices and improved box demand were offset by increased costs and lower volumes; sales were $4.7 billion, flat sequentially and up slightly year-over-year.

• Leadership is executing an 80/20 strategy focused on performance, customer-centricity, and simplification, including workforce restructuring, plant closures, and resource alignment.

• Strategic actions target $230M in run-rate adjusted EBITDA improvement, with most benefits expected in 2025.

• The DS Smith acquisition is progressing, with shareholder approvals obtained and closing expected in early Q1 2025, aiming to strengthen positions in North America and Europe.

• Announced review of strategic options for the Global Cellulose Fibers business and permanent closure of the Georgetown, SC mill.

Financial highlights

• Q3 2024 adjusted operating EPS was $0.44, down from $0.55 in Q2 and $0.64 in Q3 2023; adjusted EBIT was $233M, down from $300M in Q2 and $332M in Q3 2023.

• Net sales for Q3 2024 were $4.69 billion, up 2% year-over-year; free cash flow improved to $309M, up from $167M in Q2 2024.

• Industrial Packaging saw $70M benefit from prior index movement, $17M from box strategy, and $18M from exports; volumes were lower by $48M sequentially.

• Global Cellulose Fibers Q3 2024 net sales were $710M with operating profit of $40M, up from $31M in Q2 2024.

• Free cash flow for the first nine months of 2024 was $620M, up from $505M in 2023.

Outlook and guidance

• Q4 2024 Packaging earnings are expected to rise due to price increases and lower costs, while Global Cellulose Fibers earnings will be significantly impacted by $220M in accelerated depreciation from the Georgetown mill closure.

• Additional restructuring charges and plant closures anticipated in Q4 2024, with significant earnings benefit expected in 2025.

• FY24 capital spending expected to be $800M–$1.0B; 75% of strategic action benefits expected in 2025.

• Cost and inflation equation is expected to be positive in 2025, with 80/20 benefits outpacing inflation.