International Paper(IP) - 2024 Q1 - Quarterly Report

Earnings Performance - Net earnings in Q1 2024 were $56 million ($0.16 per diluted share), compared to a loss of $(284) million ($(0.82) per diluted share) in Q4 2023 and earnings of $172 million ($0.49 per diluted share) in Q1 2023[110] - Adjusted operating earnings in Q1 2024 were $61 million ($0.17 per diluted share), compared to $142 million ($0.41 per diluted share) in Q4 2023 and $185 million ($0.53 per diluted share) in Q1 2023[110] - Earnings from continuing operations in Q1 2024 benefited from higher average sales prices and favorable mix ($47 million) compared to Q4 2023[124] - Compared to Q1 2023, Q1 2024 benefited from lower operating costs ($15 million) and lower raw material and freight costs ($48 million)[126] - Adjusted operating profit was$169 million in Q1 2024, down from $257 million in Q4 2023 and$306 million in Q1 2023[130] Sales and Volume Trends - Sales price indexes improved across the portfolio in Q1 2024, with a $40 per ton increase in February expected to flow through sales contracts in Q2 and Q3 2024[112] - Volume in the North American Industrial Packaging business was lower in Q1 2024 due to seasonally lower shipments and impacts from a January freeze[112] - Sales volumes for Industrial Packaging were 3,991 thousand short tons in Q1 2024, up from 3,914 thousand short tons in Q1 2023[136] - Corrugated Packaging sales volumes were 2,232 thousand short tons in Q1 2024, down from 2,381 thousand short tons in Q1 2023[136] - Global Cellulose Fibers sales volumes were 729 thousand metric tons in Q1 2024, up from 688 thousand metric tons in Q1 2023[136] Segment Performance - Total business segment operating profits were$169 million in Q1 2024, compared to $257 million in Q4 2023 and$306 million in Q1 2023[131] - Industrial Packaging segment operating profit was $216 million in Q1 2024, while Global Cellulose Fibers segment had a loss of$47 million[130] - Industrial Packaging net sales for Q1 2024 were $3.808 billion, 1$216 million, 31% lower than Q4 2023 and 33% lower than Q1 2023[150] - North American Industrial Packaging sales in Q1 2024 were $3.486 billion, with operating profit of$192 million[151] - EMEA Industrial Packaging sales in Q1 2024 were $348 million, with operating profit of$24 million[153] - Global Cellulose Fibers net sales in Q1 2024 were $704 million, 7$47 million, $11 million lower than Q4 2023 and$31 million higher than Q1 2023[156] Costs and Expenses - Full-scale mill annual maintenance outage expense is expected to increase in Q2 2024, including costs associated with the Riverdale mill outage[114] - Total maintenance and economic downtime in Q1 2024 was 126,000 short tons lower than Q4 2023 for Global Cellulose Fibers[156] - Planned maintenance downtime costs in Q1 2024 were lower compared to Q4 2023 for both Industrial Packaging and Global Cellulose Fibers[152][156] - Input costs for Global Cellulose Fibers in Q1 2024 were higher primarily for energy, but lower for chemicals, wood, and energy compared to Q1 2023[156] Financial Position and Cash Flow - Net sales in Q1 2024 were $4.6 billion, flat compared to Q4 2023 but down from$5.0 billion in Q1 2023[123] - Cash provided by operations increased to $395 million in Q1 2024, up from$345 million in Q1 2023, driven by timing of mill outage spending and inventory adjustments[157] - Capital investments totaled $251 million in Q1 2024, down from$341 million in Q1 2023, with full-year 2024 capital spending expected to be $800 million to$1.0 billion[158] - Debt decreased by $3 million in Q1 2024, compared to a$257 million increase in Q1 2023[158] - Contractual obligations for future debt payments include $138 million in 2024,$189 million in 2025, $142 million in 2026,$332 million in 2027, $670 million in 2028, and$4.1 billion thereafter[159] - The company holds long-term credit ratings of BBB (S&P) and Baa2 (Moody's), with short-term ratings of A2 (S&P) and P2 (Moody's)[159] - Credit agreements total $1.9 billion, including a$1.4 billion bank credit agreement and a $500 million receivables securitization program[160] - The company repurchased$22 million of common stock in Q1 2024, with $2.96 billion remaining authorized for share repurchases as of March 31, 2024[163] - Cash dividend payments totaled$161 million in Q1 2024, consistent with $162 million in Q1 2023, at$0.4625 per share[164] - The company expects to meet capital expenditures, debt servicing, and dividend payments with current cash balances and operating cash flows, supplemented by credit facilities[162] - The pension plan is fully funded, with no anticipated cash contributions required for the next 12 months[165] Acquisitions and Divestitures - The company announced its intent to acquire DS Smith in an all-stock transaction valued at approximately $9.9 billion on April 16, 2024[111] - The company completed the sale of its 50$484 million in cash on September 18, 2023[138] Tax and Interest - Income tax provision was $27 million in Q1 2024 with an effective tax rate of 32$61 million benefit in Q4 2023 with a 19% rate[140][141] - Net interest expense decreased to $46 million in Q1 2024 from$52 million in Q4 2023 and $62 million in Q1 2023[144] - Operational effective tax rate was 31% in Q1 2024, lower than 34% in Q4 2023 due to increased deferred tax valuation allowance[140]