International Paper(IP) ZACKS·2025-04-30 18:05Core Viewpoint - International Paper Company (IP) reported mixed financial results for Q1 2025, with adjusted earnings per share of 23 cents, missing the consensus estimate of 35 cents, but showing a 35% year-over-year improvement driven by the acquisition of DS Smith and price increases [1][2]. Financial Performance - The company posted a net loss per share of 24 cents from continuing operations, impacted by one-time costs related to the DS Smith acquisition and other adjustments, compared to earnings of 16 cents in the same quarter last year [2]. - Net sales reached $5.9 billion, a 27.8% increase from the previous year, but fell short of the consensus estimate of $6.6 billion [3]. - Gross profit increased by 37.4% year over year to $1.64 billion, with a gross margin of 27.8%, up from 25.9% in the prior year [3]. - Selling and administrative costs rose 48% to $530 million, while adjusted operating profit surged 65.6% to $101 million compared to $61 million in Q1 2024 [4]. Segment Performance - Packaging Solutions North America: Sales were $3.7 billion, up 6.2% year over year, but operating profit fell 26% to $142 million [6]. - Packaging Solutions EMEA: Sales increased to $1.55 billion from $0.35 billion, with operating profit soaring 91.7% to $46 million [7]. - Global Cellulose Fibers: Sales declined 8.7% to $643 million, but the segment reported an operating profit of $17 million, recovering from a loss of $47 million in the previous year [8]. Cash and Debt Position - Cash and temporary investments totaled $1.16 billion at the end of Q1 2025, slightly down from $1.17 billion at the end of 2024 [9]. - Long-term debt increased to $9.18 billion from $5.37 billion at the end of 2024, with cash used in operating activities amounting to $288 million in Q1 2025, compared to a cash inflow of $395 million in Q1 2024 [9]. Future Expectations - The company targets sales of $27 billion for 2025, reflecting a 45% increase from $18.6 billion in 2024, driven by the DS Smith acquisition [10]. - Projected sales for North American Packaging Solutions are $15.5 billion, while EMEA Packaging Solutions are expected to reach $9 billion [11]. - The Global Cellulose Fibers segment is anticipated to contribute $2.5 billion to sales [11]. - Adjusted total EBITDA is forecasted to be between $3.5 billion and $4 billion for 2025, up from $1.99 billion in 2024 [12]. Stock Performance - International Paper's shares have increased by 41.4% over the past year, outperforming the industry average of 25.5% [13].