Financial Performance - International Paper reported full-year 2024 net earnings of $557 million, or $1.57 per diluted share, compared to $288 million, or $0.82 per diluted share in 2023[2]. - Full-year net sales for 2024 were $18.6 billion, a decrease from $18.9 billion in 2023, while fourth quarter net sales were $4.6 billion, consistent with the same period in 2023[2][6]. - The fourth quarter of 2024 saw a net loss of $147 million, or $0.42 per diluted share, compared to a loss of $284 million, or $0.82 per diluted share in the fourth quarter of 2023[2][6]. - Adjusted operating earnings for the full year 2024 were $400 million, or $1.13 per diluted share, down from $438 million, or $1.25 per diluted share in 2023[2][6]. - Net sales for Q4 2024 were $4,580 million, a slight decrease of 0.5% from $4,601 million in Q3 2024 and a decrease of 1.9% from $4,686 million in Q4 2023[22]. - Net loss for Q4 2024 was $147 million, compared to a net loss of $284 million in Q3 2024 and a net income of $150 million in Q4 2023[22]. - Basic earnings per share from continuing operations for Q4 2024 was $(0.42), an improvement from $(0.82) in Q3 2024 and an increase from $0.43 in Q4 2023[22]. - Adjusted Operating Earnings for the twelve months ended December 31, 2024, were $400 million, a decrease from $438 million in 2023[25]. - The diluted earnings per share for continuing operations was $(0.42) for the three months ended December 31, 2024, compared to $(0.82) for the same period in 2023[25]. Segment Performance - The Industrial Packaging segment reported a fourth quarter operating profit of $247 million, an improvement from a loss of $32 million in the same quarter of 2023[9]. - The Global Cellulose Fibers segment experienced a significant operating loss of $250 million in the fourth quarter of 2024, compared to a profit of $40 million in the third quarter of 2024[10]. Cash Flow and Investments - Free cash flow for the full year 2024 was $757 million, an increase from $692 million in 2023[6]. - Cash provided by operating activities for the twelve months ended December 31, 2024, was $1,678 million, down from $1,833 million in 2023[34]. - The company invested $921 million in capital projects during the twelve months ended December 31, 2024, down from $1,141 million in 2023[32]. Charges and Restructuring - The company incurred a pre-tax charge of $395 million for accelerated depreciation and restructuring, including $334 million related to the closure of the Georgetown, S.C. pulp mill[3]. - Net special items in the fourth quarter of 2024 amounted to a net after-tax charge of $146 million, compared to a charge of $12 million in the third quarter of 2024[11]. - Restructuring charges for Q4 2024 amounted to $162 million, compared to $99 million in Q3 2024 and $221 million for the full year 2024[22]. - The company reported a restructuring charge of $221 million for the twelve months ended December 31, 2024, compared to $99 million in 2023[32]. Balance Sheet - Total assets decreased to $22,800 million as of December 31, 2024, from $23,261 million as of December 31, 2023[30]. - Current liabilities increased to $4,308 million as of December 31, 2024, compared to $3,959 million as of December 31, 2023[30]. - The company’s total equity decreased to $8,173 million as of December 31, 2024, from $8,355 million as of December 31, 2023[30]. Future Outlook - The company plans to optimize and invest in its box plant system and explore strategic options for its Global Cellulose Fibers business in 2025[3]. - The company expects to close its proposed business combination with DS Smith Plc on January 31, 2025, which is anticipated to enhance its scale and global presence[19]. Economic Challenges - The company faced challenges due to macroeconomic conditions, including inflationary pressures and supply chain disruptions[19].

Core Insights - International Paper reported full-year 2024 net earnings of $557 million, or $1.57 per diluted share, with adjusted operating earnings of $400 million, or $1.13 per diluted share, compared to $18.6 billion in net sales for 2024, down from $18.9 billion in 2023 [1][15] - The fourth quarter of 2024 saw a net loss of $147 million, or $0.42 per diluted share, with adjusted operating loss of $7 million, or $0.02 per diluted share, and net sales of $4.6 billion, consistent with the same quarter in 2023 [1][5] Financial Performance - Full-year net sales were $18.6 billion in 2024, a decrease from $18.9 billion in 2023 [1] - Fourth quarter net sales were $4.6 billion in both 2024 and 2023 [1][5] - The company incurred a pre-tax charge of $395 million for accelerated depreciation and restructuring charges, including $334 million related to the closure of the Georgetown, S.C. pulp mill [2] Business Strategy - The company initiated a strategy for profitable growth as a low-cost, reliable, and innovative sustainable packaging solutions provider, focusing on restructuring and reducing costs [3] - Plans for 2025 include further cost reductions and balancing capacity with demand, alongside optimizing and investing in the box plant system [3] Segment Performance - In the fourth quarter of 2024, the Industrial Packaging segment reported net sales of $3.869 billion, while the Global Cellulose Fibers segment reported $662 million [9] - The Industrial Packaging segment's operating profit was $247 million, an improvement from a loss of $32 million in the previous quarter [9][10] - The Global Cellulose Fibers segment experienced an operating loss of $250 million, significantly impacted by lower sales prices and volumes [10] Special Items and Adjustments - Net special items in the fourth quarter of 2024 amounted to a net after-tax charge of $146 million, compared to $12 million in the third quarter of 2024 [11] - Adjusted operating earnings for the fourth quarter of 2024 were a loss of $7 million, while the full-year adjusted operating earnings were $400 million [23] Cash Flow and Liquidity - Cash provided by operations for the full year was $1.678 billion, down from $1.833 billion in 2023 [29] - Free cash flow for 2024 was $757 million, an increase from $692 million in 2023 [33]

Core Viewpoint - International Paper Company (IP) is set to report its fourth-quarter 2024 results on January 30, with expectations of revenue growth but a significant decline in earnings year-over-year [1][2]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for IP's fourth-quarter revenues is $4.72 billion, reflecting a 2.7% increase from the previous year [2]. - The consensus estimate for earnings is six cents per share, indicating a substantial year-over-year decline of 85.4% [2]. Earnings Surprise History - International Paper has beaten the Zacks Consensus Estimates in three of the last four quarters, with an average surprise of 28.83% [4]. - The company has an Earnings ESP of 0.00% and a Zacks Rank of 1 (Strong Buy) [6]. Factors Influencing Q4 Performance - Demand has picked up in 2024 after a period of softness in 2023, particularly in the e-commerce channel [7]. - Volumes are expected to decline due to two fewer shipping days, but this may be offset by higher prices and favorable input costs [8]. Segment Performance - The Industrial Packaging segment is projected to see a 4.2% year-over-year drop in volumes, with specific declines in corrugating packaging (5.8%) and containerboard (1.6%) [9]. - Average realized pricing for the Industrial Packaging segment is expected to increase by 6.7% year-over-year, leading to projected revenues of $3.93 billion, a 2.2% growth [10]. - The Global Cellulose Fibers segment is anticipated to report a 4.1% decline in volumes but an 8.4% increase in revenues to $711 million, driven by higher prices [12]. Operating Profit Projections - The Industrial Packaging segment's operating profit is expected to decline by 20% to $252 million due to higher seasonal costs and increased depreciation from facility closures [11]. - The Global Cellulose Fibers segment is projected to report an operating loss of $235 million, significantly wider than the previous year's loss of $58 million [13]. Stock Performance - International Paper's shares have increased by 55.7% over the past year, outperforming the industry growth of 46.1% [14].

Company Announcement - International Paper has appointed Joy Roman as Senior Vice President, Chief People and Strategy Officer, effective February 1, 2025 [1] - Joy Roman will lead talent development, organizational effectiveness, and corporate strategy, while also overseeing Sustainability and Communications functions [1] - Roman brings extensive experience in human resources and strategy, having previously served as Chief People & Strategy Officer at Berry Global and holding leadership roles at 3M, Toll Brothers, and the De Beers Group [2] Executive Background - Joy Roman holds an MBA from the Yale School of Management and a bachelor's degree in English and communications from the University of Wisconsin [2] - Roman began her career as a management consultant at McKinsey & Company [2] Company Overview - International Paper is a global producer of sustainable packaging, pulp, and fiber-based products, and one of the world's largest recyclers [3] - The company employs approximately 39,000 colleagues globally and operates manufacturing facilities in North America, Europe, Latin America, and Africa [3] - International Paper reported net sales of $18.9 billion in 2023 [3]

Core Viewpoint - International Paper (IP) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with near-term stock price movements [4][6]. - International Paper is projected to earn $1.18 per share for the fiscal year ending December 2024, reflecting a year-over-year decline of 45.4% [8]. - Over the past three months, the Zacks Consensus Estimate for International Paper has increased by 10.4%, indicating a positive trend in earnings outlook [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, highlighting the superior earnings estimate revision feature of these stocks [9][10]. - The upgrade of International Paper to Zacks Rank 1 positions it among the top 5% of stocks, suggesting potential for higher stock prices in the near term [10].

Industry Overview - The Zacks Paper and Related Products industry benefits from rising e-commerce activities and sustained demand from consumer-oriented sectors like food, beverages, and healthcare [1] - The industry is highly diversified, producing graphic paper, packaging paper, and absorbent hygiene products, catering to sectors such as e-commerce, retail, and healthcare [3] - The industry is positioned to capitalize on the growing consumer preference for environmentally friendly packaging solutions [1] Key Trends - E-commerce is driving packaging demand, with e-commerce accounting for over 19% of global retail sales in 2023, projected to reach 25% by 2027 [4] - Global e-commerce revenues are expected to reach $4,791 billion by 2025, with a CAGR of 7.83% from 2025 to 2029 [4] - Increased M&A activities are transforming the industry, with notable mergers like Smurfit Westrock and International Paper's acquisition of DS Smith [5] - Sustainability is a key driver, with the industry incorporating recycled content and investing in eco-friendly production methods [6] - Rising costs of transportation, chemicals, and fuel are being offset through pricing actions, cost reduction, and automation [7] Industry Performance - The Paper and Related Products industry has outperformed the S&P 500 and the Basic Materials sector, with a 42.5% gain over the past year [11] - The industry's forward 12-month EV/EBITDA ratio is 9.24X, compared to the S&P 500's 13.96X and the Basic Materials sector's 6.64X [13] - Over the last five years, the industry's EV/EBITDA ratio has ranged between 7.82X and 16.26X, with a median of 10.33X [15] Key Companies - Suzano has inaugurated the world's largest single-line pulp mill, increasing its pulp production capacity by 24% to 13.5 million tons annually [16] - Suzano acquired industrial assets in Arkansas and North Carolina, positioning itself as a major supplier of paper for liquid packaging boards in North America [16] - Sylvamo's Project Horizon aims to save over $110 million in 2024 through operational improvements and cost reductions [19] - International Paper is optimizing its cost structure and investing in corrugated packaging, with its acquisition of DS Smith expected to generate $514 million in pre-tax cash synergies annually by the fourth year [22] - Klabin has seen a 6% year-over-year increase in sales volumes and is ramping up production with new paper machines, aiming to boost corrugated cardboard conversion capacity to 1.2 million tons annually [23] Earnings and Valuation - Suzano's 2025 earnings estimate has surged 39% in the past 60 days, indicating a year-over-year growth of 364% [17] - Sylvamo's 2024 earnings estimates have increased by 10.5%, with a year-over-year growth of 17.5% [20] - International Paper's 2025 earnings estimate has risen 3.4%, indicating a year-over-year growth of 156% [22] - Klabin's 2025 earnings estimate has increased by 15%, showing significant improvement from 2024 [24]

Core Viewpoint - International Paper (IP) is recognized as a strong buy with a focus on renewable fiber-based products, including packaging and paper items, indicating a positive outlook for the stock [1] Company Overview - International Paper Co. specializes in producing renewable fiber-based packaging and pulp products, operating through segments such as Industrial Packaging and Global Cellulose Fibers [2] - The company was founded in 1898 and is headquartered in Memphis, TN [2] Earnings History - The company has a solid earnings history, surpassing the Zacks Consensus Estimate in 3 of the last 4 quarters, with a recent earnings gain of 44 cents against a consensus of 24 cents, resulting in an 83% positive earnings surprise [4] - The average earnings surprise over the last four quarters is 28% [4] Earnings Estimates Revisions - Recent earnings estimate revisions show an increase for the next quarter from $0.42 to $0.44, while the full year 2024 estimate decreased from $1.42 to $1.18, and next year's estimate increased from $2.92 to $3.02 [5] Growth Projections - Revenue for 2024 is projected to be around $18.7 billion, reflecting a contraction of just under 1%, while 2025 is expected to see sales of $19.6 billion, indicating a growth of 4.7% [6] Valuation Metrics - The forward price-to-earnings (PE) ratio stands at 18.3x, which is considered high given the lack of growth in 2024, while the price-to-book ratio of 2.2x remains attractive for value-oriented investors [7] - The price-to-sales ratio is slightly above 1x, typical for commodity-based products [7] Margin Analysis - Operating margins are relatively thin, having decreased from 3.3% to 2.9% over the last two quarters, indicating a lack of competitive advantage [8]

Company Performance - International Paper (IP) has returned approximately 1.6% year-to-date, outperforming the Basic Materials sector, which has returned an average of -11.5% [4] - The Zacks Consensus Estimate for IP's full-year earnings has increased by 13.9% over the past three months, indicating improved analyst sentiment and a more positive earnings outlook [3] Industry Context - International Paper is part of the Paper and Related Products industry, which currently ranks 44 in the Zacks Industry Rank, with stocks in this group gaining about 36.4% year-to-date [6] - In comparison, New Found Gold Corp. (NFGC), which belongs to the Mining - Gold industry ranked 163, has seen a year-to-date increase of 12.9% [7]

Core Insights - International Paper Company (IP) is experiencing growth due to strategic initiatives, ongoing investments, and acquisitions aimed at enhancing capacity and market presence [1][3][4] Group 1: Growth Initiatives - IP is expected to see volume growth in its Industrial Packaging segment in Q4 2024, driven by stable demand in e-commerce and strong performance in food and beverage sectors [1][12] - The company has entered an agreement to acquire DS Smith, which will strengthen its corrugated packaging business in Europe and focus on sustainable packaging [3][4] - The acquisition is projected to be accretive to earnings in the first year and generate at least $514 million in pre-tax cash synergies annually by the end of the fourth year post-closure [4] Group 2: Demand Trends - There has been a notable pickup in demand for IP's products after a period of softness in 2023, attributed to inventory destocking [5] - The fresh food segment is benefiting from consumer trends favoring home-cooked meals, while the beverage segment is expected to improve despite previous pressures [6] Group 3: Operational Focus - IP is exploring options for its Global Cellulose Fibers business, with around 75% of the benefits from strategic actions anticipated in 2025 [7] - The Global Cellulose Fibers volumes decreased in Q3 2024, but the company expects higher earnings sequentially in the Industrial Packaging segment for Q4 2024 due to prior price index increases and lower costs [8][12] Group 4: Financial Performance - The company's shares have increased by 57.1% over the past year, outperforming the industry growth of 46.9% [15]

Group 1 - International Paper's shares have increased over 70% in the past year, indicating strong business momentum [1] - The company is exploring strategic alternatives, which could enhance its growth potential [1]