International Paper (IP) Q4 2024 earnings summary

Executive summary

• DS Smith acquisition expected to close January 31, 2025, with required divestiture of five European box plants and integration to create a global leader in sustainable packaging.

• 2024 marked by transformational cost and commercial improvements, including strategic closures, productivity initiatives, and a focus on building a performance-driven, customer-centric culture.

• Earnings were lower year-over-year due to strategy reset, lower volumes from contract restructuring, and mill reliability headwinds.

• 2024 results include a $395 million pre-tax charge for accelerated depreciation and restructuring, mainly from the Georgetown mill closure.

• Management expects 2025 to be transformational, focusing on cost reduction, capacity alignment, and DS Smith integration.

Financial highlights

• Full-year 2024 net sales were $18.6 billion, down from $18.9 billion in 2023; adjusted operating earnings were $400 million, down from $438 million.

• Adjusted operating EPS was $1.13, down from $1.25; adjusted EBITDA was $2.0 billion, down from $2.2 billion; EBITDA margin declined to 10.7%.

• Free cash flow for 2024 was $757 million, up from $692 million in 2023.

• Fourth quarter 2024 net sales were $4.58 billion, nearly flat year-over-year; adjusted EBIT was $6 million, down from $233 million in Q3.

• Fourth quarter adjusted operating EPS was -$0.02, mainly due to $0.56/share accelerated depreciation from closures.

Outlook and guidance

• 2025 expected to be transformational, with earnings stabilizing early and ramping up through cost actions, commercial wins, and productivity improvements.

• FY25 interest expense projected at ~$230 million; operational tax rate outlook of 24%-26%.

• Q1 2025 outlook anticipates improved performance from cost reduction initiatives and non-repeat of 4Q24 plant closures; Industrial Packaging adjusted earnings up $52 million sequentially, Global Cellulose Fibers up ~$220 million.

• Detailed outlook and roadmap to be provided at March Investor Day, post-DS Smith transaction close.

• Strategic options for the Global Cellulose Fibers business are being explored.