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International Paper (IP) Beats on Q1 Earnings, Misses on Sales

Zacks Equity Research

International Paper Company IP delivered first-quarter 2019 adjusted earnings of $1.11 per share, up 18% year over year. The bottom-line figure also outpaced the Zacks Consensus Estimate of 91 cents.

Including one-time items, earnings in the first quarter came in at $1.05 compared with the year-ago quarter’s $1.74.

Net sales improved to $5,643 million in the reported quarter from $5,621 million recorded in the year-ago quarter. The reported figure, however, missed the Zacks Consensus Estimate of $5,741 million.

Adjusted cost of sales was $3,956 million, down from $3,966 million recorded in the prior-year quarter. Adjusted gross profit climbed 2% year over year to $1,687 million. Selling and administrative expenses dropped 2% year over year to $413 million in the quarter. Adjusted operating earnings of $447 million indicated a year-over-year improvement of 13%.

International Paper Company Price, Consensus and EPS Surprise

International Paper Company Price, Consensus and EPS Surprise | International Paper Company Quote

Segment Performance

Industrial Packaging: Sales in this segment increased to $3,832 million from $3,827 million in the year-ago period. Adjusted operating profit declined 9% year over year to $421 million.

Printing Papers: This segment’s sales were $1,065 million in the reported quarter, up 1.1% from $1,053 million in the year-earlier quarter. Adjusted operating profit for the segment was $144 million compared with $64 million recorded in the year-ago quarter.

Global Cellulose Fibers: Sales of this segment came in at $689 million compared with $677 million posted in the prior-year quarter. The segment’s adjusted operating profit increased to $35 million from $15 million in the year-ago quarter.

Balance Sheet

Cash and temporary investments aggregated $641 million at the end of the first quarter compared with $589 million at the end of the 2018-end. As of the quarter’s end, long-term debt was $9,965 million compared with $10,015 million as of Dec 31, 2018.
 
Cash flow from operating activities was $733 million in the reported quarter compared with $663 million witnessed in the prior-year period. Free cash flow was $440 million during the January-March quarter compared with the year-earlier quarter’s $174 million.

International Paper returned $400 million to shareholders through dividends and share repurchases during the March-end quarter.

The company projects improved seasonal demand in the ongoing quarter. It is also well poised to generate strong cash flows in 2019.

Price Performance

International Paper’s shares have lost 15.4% over the past year compared with the industry’s decline of 34.8%.



Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Sandstorm Gold Ltd SAND, Innospec Inc IOSP and Fortescue Metals Group Ltd FSUGY, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sandstorm Gold has an expected earnings growth rate of 200% for 2019. The company’s shares have gained 13.7% in the past year.

Innospec has an expected earnings growth rate of 3.5% for the current year. The company’s shares have appreciated 12.8% in a year’s time.

Fortescue Metals has an expected earnings growth rate of 101.5% for 2019. Its shares have surged 53.3% in a year’s time.

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