IP's Q4 Earnings Beat Estimates, Sales Dip Y/Y on Low Volumes

Core Insights - International Paper Company (IP) reported an adjusted loss of two cents per share in Q4 2024, outperforming the Zacks Consensus Estimate of a seven-cent loss, and showing improvement from a restated adjusted loss of 51 cents per share in the same quarter last year [1][3] - The company experienced lower volumes and higher input and operational costs, but these were mitigated by an improved price mix, with a notable 46-cent benefit from accelerated depreciation related to strategic mill actions [2][3] Financial Performance - Net sales for Q4 2024 were $4.58 billion, a decrease of 0.5% year-over-year, missing the Zacks Consensus Estimate of $4.7 billion [4] - Cost of sales was reported at $3.25 billion, slightly down from $3.28 billion in the previous year, while selling and administrative expenses surged by 46% to $521 million from $357 million [5] - Adjusted operating profit was $6 million, a significant recovery from a loss of $154 million in the prior year, with an adjusted operating margin of 0.1% compared to a negative 3.3% [6] Segment Performance - The Industrial Packaging segment generated sales of $3.87 billion, up 0.7% year-over-year, with an operating profit of $247 million, contrasting with a loss of $32 million in the previous year [7] - Global Cellulose Fibers segment sales increased by 0.9% to $662 million, but the segment reported a wider operating loss of $250 million compared to a loss of $133 million in the prior year [10] Fiscal Year Overview - For the full year 2024, adjusted earnings were $1.13 per share, exceeding the Zacks Consensus Estimate of $1.07, but reflecting a 10% decline from $1.25 in 2023 [12] - Total net sales for 2024 were $18.6 billion, missing the Zacks Consensus Estimate of $18.78 billion, and representing a 1.6% year-over-year decline [12] Cash and Debt Position - At the end of 2024, cash and temporary investments totaled $1.17 billion, up from $1.11 billion at the end of 2023, while long-term debt decreased to $5.37 billion from $5.46 billion [13] - Free cash flow improved to $757 million from $692 million in the previous year [13] Future Expectations - The company anticipates higher volumes in the Industrial Packaging segment for Q1 2025, although pricing is expected to be negative [14] - The Global Cellulose Fibers segment is expected to maintain stable volumes but face lower prices, with the company exploring strategic options for this business [15] Stock Performance - International Paper's shares have increased by 59.7% over the past year, outperforming the industry growth of 47.2% [17]