International Paper (IP) Q2 Earnings Beat, Dip Y/Y on Low Prices

Core Viewpoint - International Paper Company (IP) reported second-quarter 2024 adjusted earnings of 55 cents per share, exceeding the Zacks Consensus Estimate by 38%, but down 7% year over year due to lower prices in key segments [1] Financial Performance - Net sales were approximately $4.7 billion, a 1% increase year over year, but below the Zacks Consensus Estimate of $4.8 billion [1] - Adjusted cost of sales was $3.3 billion, down 0.7% from the previous year, while gross profit increased 6% to $1.4 billion [2] - Adjusted selling and administrative expenses rose 26% to $424 million, leading to a total segment operating profit decrease of 4% to $322 million [2] - Adjusted EBITDA was $561 million, down from $570 million year over year, with an adjusted EBITDA margin of 11.9%, reflecting a 30-basis point contraction [2] Segment Performances - Industrial Packaging segment sales totaled $3.9 billion, up 1% year over year, with operating profit falling 4% to $291 million [3] - Global Cellulose Fibers segment sales rose 3% to $717 million, with operating profit at $31 million, marking a return to profitability after two quarters of losses [4] Cash & Debt Position - Cash and temporary investments totaled $1.05 billion at the end of Q2, down from $1.11 billion at the end of 2023 [5] - Long-term debt decreased to $5.33 billion from $5.46 billion at the end of 2023, with cash flow from operating activities at $760 million for the first half of 2024 [5] Expectations for Q3 - The company anticipates lower volumes in the Industrial Packaging segment due to seasonal factors and expects third-quarter earnings to dip from the second-quarter level [6] Update on Acquisition of DS Smith - The acquisition of DS Smith is expected to enhance IP's corrugated packaging business in Europe and is projected to provide at least $514 million in annual pre-tax cash synergies by the end of the fourth year post-acquisition [7] Stock Performance - International Paper's shares have increased by 42.9% over the past year, outperforming the industry's growth of 32.6% [8]