International Paper (IP) Q4 2024 earnings summary

Executive summary

• DS Smith acquisition expected to close January 31, 2025, with European Commission approval and required divestiture of five box plants in France, Spain, and Portugal within six months.

• 2024 marked by transformational cost and commercial improvements, strategic closures, productivity initiatives, and a focus on building a performance-driven, customer-centric culture.

• Earnings were lower year-over-year due to strategy reset, lower volumes from contract restructuring, and mill reliability headwinds.

• Major cost reduction initiatives underway, including $1.2 billion in net cost out, $120 million annual savings from restructuring, and $110 million from plant closures.

• Management expects 2025 to be transformational, focusing on cost reduction, capacity alignment, and integrating DS Smith.

Financial highlights

• Full-year 2024 net sales were $18.6 billion, down from $18.9 billion in 2023; adjusted operating earnings were $400 million, down from $438 million.

• Adjusted operating EPS for 2024 was $1.13, down from $1.25; adjusted EBITDA was $2.0 billion, down from $2.2 billion.

• Fourth quarter adjusted operating EPS was -$0.02, down from $0.44 in Q3, mainly due to $0.56/share accelerated depreciation from facility closures.

• Free cash flow for 2024 was $757 million, up from $692 million in 2023, but impacted by working capital changes, higher capital spending, and DS Smith transaction costs.

• Adjusted EBITDA margin declined to 10.7% from 11.8% year-over-year.

Outlook and guidance

• 2025 expected to be a transformational year, with earnings stabilizing in early months and ramping up through cost actions and commercial improvements.

• No detailed 2025 outlook provided due to UK regulatory constraints; full guidance to be shared at March Investor Day.

• FY25 interest expense projected at ~$230 million; operational tax rate outlook of 24%-26%.

• Strategic options for the Global Cellulose Fibers business are being explored.

• Integration of DS Smith is expected to position the company as a global leader in sustainable packaging.