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International Paper (IP) Q2 Earnings Top, Sales Lag Estimates

Zacks Equity Research

International Paper Company IP delivered second-quarter 2019 adjusted earnings of $1.15 per share, down 3.4% year over year. The bottom-line figure, nonetheless, outpaced the Zacks Consensus Estimate of $1.01.

Including one-time items, earnings during the April-June quarter came in at 73 cents compared with the year-ago quarter’s 97 cents.

Net sales declined to $5,667 million in the reported quarter from $5,833 million recorded in the year-ago period. The reported figure, however, missed the Zacks Consensus Estimate of $5,813 million.

Adjusted cost of sales was $3,928 million, up from the $3,931 million recorded in the prior-year quarter. Adjusted gross profit declined 8.6% year over year to $1,739 million. Selling and administrative expenses dropped 13% year over year to $402 million in the quarter. Adjusted operating earnings came in at $460 million, calling for a year-over-year decline of 7.6%. 

International Paper Company Price, Consensus and EPS Surprise

International Paper Company Price, Consensus and EPS Surprise

International Paper Company price-consensus-eps-surprise-chart | International Paper Company Quote

Segment Performance

Industrial Packaging: Sales in this segment slipped to $3,864 million from $4,022 million in the year-earlier period. Adjusted operating profit declined 9.5% year over year to $515 million.

Printing Papers: This segment’s sales were $1,088 million in the second quarter, up 2.6% from $1,060 million in the year-earlier quarter. Adjusted operating profit for the segment was $114 million compared with $94 million recorded in the year-ago period.

Global Cellulose Fibers: Sales of this segment came in at $661 million compared with $692 million recorded in the prior-year quarter. The segment reported break-even results in the second quarter of 2019 compared with $69 million recorded in the year-ago period.

Balance Sheet

Cash and temporary investments aggregated $787 million at the end of the second quarter compared with $589 million at the end of the 2018. As of the quarter’s end, long-term debt was $10,050 million compared with $10,015 million as of Dec 31, 2018.

Cash flow from operating activities was $1,067 million in the reported quarter compared with $801 million generated in the prior-year period. Free cash flow was $732 million during the April-June quarter compared with the year-earlier quarter’s $361 million.

International Paper repurchased shares worth $231 million during the June-end quarter, bringing the trailing 12-month total to $811 million. The company returned $430 million to shareholders through dividends and share repurchases during the reported quarter.

Price Performance

International Paper’s shares have lost 11.5% over the past year compared with the industry’s decline of 33.6%.



Zacks Rank & Key Picks

International Paper currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are SSR Mining Inc SSRM, Kinross Gold Corporation KGC and Arconic Inc. ARNC, all sporting a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

SSR Mining has an expected earnings growth rate of 69.6% for 2019. The company’s shares have rallied 48.2% in the past year.

Kinross has a projected earnings growth rate of 80% for the current year. The stock has gained 14.1% in a year’s time.

Arconic has an estimated earnings growth rate of 38.2% for the ongoing year. Its shares have appreciated 30.7% over the past year.

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