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International Paper Reports Second Quarter 2019 Results

MEMPHIS, Tenn., July 25, 2019 /PRNewswire/ -- International Paper (IP) today reported second quarter 2019 financial results.

International Paper logo. (PRNewsfoto/International Paper)

HIGHLIGHTS

  • Second quarter net earnings attributable to International Paper of $292 million ($0.73 per diluted share) compared with $424 million ($1.05 per diluted share) in the first quarter of 2019 and $405 million ($0.97 per diluted share) in the second quarter of 2018
  • Second quarter adjusted operating earnings* (non-GAAP) of $460 million ($1.15 per diluted share) compared with $447 million ($1.11 per diluted share) in the first quarter of 2019 and $498 million ($1.19 per diluted share) in the second quarter of 2018
  • Second quarter equity earnings of $80 million compared with $70 million in the second quarter of 2018
  • Second quarter cash provided by operations of $1.1 billion and year-to-date of $1.8 billion compared with $1.5 billion year-to-date in the same period of 2018
  • Second quarter share repurchases of $231 million, bringing the trailing 12 month total to $811 million

"International Paper delivered solid earnings and generated strong cash from operations in the second quarter," said Mark Sutton, Chairman and Chief Executive Officer. "We continued to operate well and manage costs across our businesses. We also returned nearly $430 million to shareholders through dividends and share repurchases. Looking ahead to the third quarter, we will leverage the strength and flexibility of International Paper to maximize performance as we manage through a challenging environment."

Diluted Net EPS Attributable to International Paper Shareholders and Adjusted Operating EPS

 




Second
Quarter
2019


First

Quarter
2019


Second
Quarter
2018


Net Earnings


$

0.73



$

1.05



$

0.97



Less – Discontinued Operations (Gain) Loss






0.05



Net Earnings (Loss) from Continuing Operations


0.73



1.05



1.02



Add Back – Non-Operating Pension Expense


0.01



0.02



0.07



Add Back – Net Special Items Expense (Income)


0.41



0.04



0.10



Adjusted Operating Earnings*


$

1.15



$

1.11



$

1.19



*    Adjusted operating earnings (non-GAAP) is defined as net earnings from continuing operations attributable to International Paper Company (GAAP) excluding special items and non-operating pension expense. Management uses this measure to focus on on-going operations, and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present consolidated operating results. For discussion of special items, net and non-operating pension expense, see the footnotes to the Consolidated Statement of Operations.

 

Key Financial Measures




(In millions)


Second
Quarter
2019


First
Quarter
2019


Second
Quarter
2018


Net Sales


$

5,667



$

5,643



$

5,833



Net Earnings Attributable to International Paper


292



424



405



Business Segment Operating Profit


472



579



697



Adjusted Operating Earnings


460



447



498



Cash Provided By (Used For) Operations


1,067



733



801



Free Cash Flow


732



440



361



 

SEGMENT INFORMATION
Business segment operating profits are used by International Paper's management to measure the earnings performance of its businesses. Second quarter 2019 business segment net sales and operating profits compared with the first quarter of 2019 and the second quarter of 2018 are as follows:

Business Segment Results




(In millions)


Second
Quarter
2019


First
Quarter
2019


Second
Quarter
2018


Net Sales by Business Segment








Industrial Packaging


$

3,864


$

3,832


$

4,022


Global Cellulose Fibers


661


689


692


Printing Papers


1,088


1,065


1,060


Corporate and Inter-segment Sales


54


57


59


Net Sales


$

5,667


$

5,643


$

5,833


Operating Profit by Business Segment








Industrial Packaging


$

507


$

404


$

537


Global Cellulose Fibers


(2)


32


66


Printing Papers


(33)


143


94


Total Business Segment Operating Profit


$

472


$

579


$

697


Industrial Packaging operating profits in the second quarter of 2019 were $507 million ($515 million excluding special items) compared with $404 million ($421 million excluding special items) in the first quarter of 2019. In North America, earnings increased due to seasonally higher demand for boxes, strong manufacturing performance and favorable input costs.  Earnings were negatively impacted by lower export containerboard prices and volumes. Planned maintenance outage expenses increased, with 80% of our annual planned outages now completed. In Europe, earnings increased driven by higher average margins and favorable manufacturing operations which benefited from improved performance at the Madrid mill, partially offset by seasonally lower volumes, primarily in Morocco.

Global Cellulose Fibers operating profits in the second quarter of 2019 were $(2) million ($0 million excluding special items) compared with $32 million ($35 million excluding special items) in the first quarter of 2019. Earnings decreased due to lower average sales prices for fluff and market pulp driven by weaker economic conditions. Planned maintenance outage expenses were also higher as we completed our largest planned maintenance outage quarter.  Input costs were favorable, primarily for wood and chemicals.

Printing Papers operating profits in the second quarter of 2019 were $(33) million ($114 million excluding special items) versus $143 million ($144 million excluding special items) in the first quarter of 2019. Earnings were negatively affected by the net impairment of our India Papers business, included as a special item below. In North America, increased planned maintenance outages were partially offset by improved sales prices and improved manufacturing operations. In Brazil, earnings increased due to seasonally stronger demand, partially offset by unfavorable input costs. In Europe and Russia, earnings decreased primarily due to planned maintenance outages in both Europe and Russia.

EQUITY METHOD INVESTMENTS
Ilim joint venture equity earnings were $67 million in the second quarter of 2019 compared with $101 million in the first quarter of 2019. Operationally, earnings decreased due to lower export sales prices for hardwood and softwood pulp to Asia and containerboard to EMEA. The Company recognized a non-cash after-tax foreign exchange gain of $7 million in the second quarter of 2019 ($0.02 per diluted share), compared with a gain of $21 million in the first quarter of 2019 ($0.05 per diluted share), primarily due to Ilim's U.S. dollar denominated net debt. The Company also received cash dividends of $239 million in the second quarter of 2019.

Graphic Packaging equity earnings on our 21% ownership position were $14 million in the second quarter of 2019, compared with $13 million in the first quarter of 2019.

CORPORATE EXPENSES
Corporate expenses were $3 million for the second quarter of 2019, compared with $21 million in the first quarter of 2019.

EFFECTIVE TAX RATE
The reported effective tax rate for the second quarter of 2019 was 38% compared with 25% for the first quarter of 2019. The higher reported effective tax rate reflects the impact of the net impairment of our India Papers business as well as a statutory tax rate change in Luxembourg, both included as special items below.

Excluding special items, non-operating pension expense and discontinued operations, the effective tax rate for the second quarter of 2019 was 25%, equal to the effective tax rate of 25% in the first quarter of 2019.

EFFECTS OF SPECIAL ITEMS
Special items in the second quarter of 2019 amount to a net after-tax charge of $162 million ($0.41 per diluted share) compared with $15 million ($0.04 per diluted share) in the first quarter of 2019 and $43 million ($0.10 per diluted share) in the second quarter of 2018.  Special items in all periods include the following charges (gains):



Second Quarter 2019


First Quarter 2019


Second Quarter 2018


(In millions)


Before
Tax

After Tax


Before
Tax

After Tax


Before
Tax

After Tax


Restructuring and other charges, net:











EMEA Packaging business optimization








26


18



Total restructuring and other charges, net








26


18



India impairment


145


143









Multi-employer pension plan exit liability





16


12






Gain on sale of EMEA Packaging box plant





(7)


(6)






Abandoned property removal


11


8



11


8



9


7



Smurfit-Kappa acquisition proposal costs








12


9



Other


2


2



1


1






Tax expense, net



9







9



Total special items, net


$

158


$

162



$

21


$

15



$

47


$

43


























DISCONTINUED OPERATIONS
Discontinued operations in the second quarter of 2018 included a pre-tax loss on the 2018 transfer of the North American Consumer Packaging business of $28 million ($21 million after taxes) to adjust the gain on the transfer of the business associated with the final post-closing adjustments and charges of $2 million (before and after taxes) for costs associated with the transfer.

EARNINGS WEBCAST
The company will host a webcast today to discuss earnings and current market conditions, beginning at 10 a.m. ET (9 a.m. CT). All interested parties are invited to listen to the webcast via the company's website at internationalpaper.com by clicking on the Performance tab and going to the Presentations and Events/Webcasts page. A replay of the webcast will also be on the website beginning approximately two hours after the call. Parties who wish to participate in the webcast via teleconference may dial +1 (706) 679-8242 or, within the U.S. only, (877) 316-2541, and ask to be connected to the International Paper second quarter earnings call. The conference ID number is 3183455. Participants should call in no later than 9:45 a.m. ET (8:45 a.m. CT).  An audio-only replay will be available for ninety days following the call.  To access the replay, dial +1 (404) 537-3406 or, within the U.S. only, (855) 859-2056 or (800) 585-8367, and when prompted for the conference ID, enter 3183455.

About International Paper
International Paper (IP) is a leading global producer of renewable fiber-based packaging, pulp and paper products with manufacturing operations in North America, Latin America, Europe, North Africa, India and Russia. We produce corrugated packaging products that protect and promote goods, and enable world-wide commerce; pulp for diapers, tissue and other personal hygiene products that promote health and wellness; and papers that facilitate education and communication. We are headquartered in Memphis, Tenn., employ more than 52,000 colleagues and serve more than 25,000 customers in 150 countries. Net sales for 2018 were $23 billion. For more information about International Paper, our products and global citizenship efforts, please visit internationalpaper.com.

Certain statements in this press release may be considered forward-looking statements. Words such as "expects", "anticipates", "believes", "estimates" and similar expressions identify forward-looking statements. These statements reflect management's current views and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. Factors which could cause actual results to differ include but are not limited to: (i) the level of our indebtedness and changes in interest rates; (ii) industry conditions, including but not limited to changes in the cost or availability of raw materials, energy and transportation costs, competition we face, cyclicality and changes in consumer preferences, demand and pricing for our products; (iii) global economic conditions and political changes, including but not limited to the impairment of financial institutions, changes in currency exchange rates, credit ratings issued by recognized credit rating organizations, the amount of our future pension funding obligation, changes in tax laws and pension and health care costs; (iv) unanticipated expenditures related to the cost of compliance with existing and new environmental and other governmental regulations and to actual or potential litigation; (v) whether we experience a material disruption at one of our manufacturing facilities; (vi) risks inherent in conducting business through joint ventures; (vii) our ability to achieve the benefits we expect from strategic acquisitions, divestitures, restructurings and capital investments; and (viii) other factors that can be found in International Paper's press releases and U.S. Securities and Exchange Commission (the "SEC") filings. These and other factors that could cause or contribute to actual results differing materially from such forward-looking statements are discussed in greater detail in the Company's SEC filings. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

INTERNATIONAL PAPER COMPANY
Consolidated Statement of Operations
Preliminary and Unaudited
(In millions, except per share amounts)

















Three Months Ended


Three Months
Ended


Six Months Ended 





June 30,


March 31,


June 30,





2019


2018


2019


2019


2018



Net Sales


$  5,667


$  5,833


$

5,643


$   11,310


$   11,454



Costs and Expenses













Cost of products sold


3,901

(a)

3,922

(g)

3,929

(a)

7,830

(a)

7,870

(g)


Selling and administrative expenses


402


451

(h)

413


815


872

(h)


Depreciation, amortization and cost of timber harvested


321

(b)

330


315

(b)

636

(b)

655



Distribution expenses


384


403


389


773


769



Taxes other than payroll and income taxes


43


42


43


86


86



Restructuring and other charges, net



26

(i)



48

(i)


Net (gains) losses on sales and impairments of businesses


152

(c)


(7)

(c)

145

(c)



Interest expense, net


122

(d)

133


133


255

(d)

268



Non-operating pension expense


8


36


10


18


40



Earnings (Loss) From Continuing Operations Before Income Taxes and
Equity Earnings


334


490


418


752


846



Income tax provision (benefit)


128

(e)

130

(j)

106


234

(e)

219

(j)


Equity earnings (loss), net of taxes


80


70


114


194


165



Earnings (Loss) From Continuing Operations


286


430


426


712


792



Discontinued operations, net of taxes



(23)

(k)



345

(k)


Net Earnings (Loss)


286


407


426


712


1,137



Less: Net earnings (loss) attributable to noncontrolling interests


(6)

(f)

2


2


(4)

(f)

3



Net Earnings (Loss) Attributable to International Paper Company


$     292


$     405


$                        424


$         716


$

1,134



Basic Earnings Per Common Share Attributable to International Paper Common Shareholders













Earnings (loss) from continuing operations


$    0.74


$    1.03


$                       1.06


$        1.80


$

1.91



Discontinued operations



(0.05)




0.83



Net earnings (loss)


$    0.74


$    0.98


$                       1.06


$        1.80


$

2.74



Diluted Earnings Per Common Share Attributable to International Paper Common Shareholders













Earnings (loss) from continuing operations


$    0.73


$    1.02


$                       1.05


$        1.78


$

1.88



Discontinued operations



(0.05)




0.83



Net earnings (loss)


$    0.73


$    0.97


$                       1.05


$        1.78


$

2.71



Average Shares of Common Stock Outstanding - Diluted


398.2


417.7


403.2


401.4


418.8















The accompanying notes are an integral part of this consolidated statement of operations.







(a)

Includes pre-tax charges of $11 million ($8 million after taxes) for each of the three months ended June 30, 2019 and March 31, 2019 and $22 million ($16 million after taxes) for the six months ended June 30, 2019 for the removal of abandoned property at our mills and a pre-tax charge of $16 million ($12 million after taxes) for the three months and six months ended March 31, 2019 and June 30, 2019 for costs associated with a multi-employer pension plan exit liability.



(b)

Includes charges of $1 million (before and after taxes) for each of the three months ended June 30, 2019 and March 31, 2019 and $2 million (before and after taxes) for the six months ended June 30, 2019 for accelerated depreciation associated with the announced conversion of a paper machine at our Riverdale mill to containerboard production.



(c)

Includes a loss of $95 million (before and after taxes) for the three months and six months ended June 30, 2019 related to the foreign currency cumulative translation adjustment resulting from the classification of the net assets of our India Papers business as held for sale, a pre-tax loss of $57 million ($55 million after taxes) for the three months and six months ended June 30, 2019 for the impairment of the net assets of our India Papers business and a pre-tax gain of $7 million ($6 million after taxes) for the three months ended March 31, 2019 and six months ended June 30, 2019 related to the sale of a box plant in our EMEA Packaging business.



(d)

Includes a charge of $1 million (before and after taxes) for the three months and six months ended June 30, 2019 for interest expense associated with foreign tax audits.



(e)

Includes tax expense of $9 million for the three months and six months ended June 30, 2019 related to a tax rate change in Luxembourg, tax expense of $3 million for the three months and six months ended June 30, 2019 related to foreign tax audits and a tax benefit of $3 million for the three months and six months ended June 30, 2019 related to state income tax legislative changes.



(f)

Includes the allocation of loss to noncontrolling interest of $7 million (before and after taxes) for the three months and six months ended June 30, 2019 associated with the impairment of the net assets of our India Papers business.



(g)

Includes pre-tax charges of $9 million ($7 million after taxes) for the three months ended June 30, 2018 and $18 million ($14 million after taxes) for the six months ended June 30, 2018 for the removal of abandoned property at our mills and a pre-tax charge of $9 million ($7 million after taxes) for the six months ended June 30, 2018 for a legal settlement.



(h)

Includes a pre-tax charge of $12 million ($9 million after taxes) for the three months and six months ended June 30, 2018 associated with our proposal to acquire Smurfit Kappa.



(i)

Includes pre-tax charges of $26 million ($18 million after taxes) and $48 million ($35 million after taxes) for the three months and six months ended June 30, 2018, respectively, related to the optimization of our EMEA Packaging business.



(j)

Includes tax expense of $9 million for the three months and six months ended June 30, 2018 related to state income tax legislative changes.



(k)

Includes a pre-tax charge of $28 million ($21 million after taxes) and pre-tax income of $488 million ($364 million after taxes) for the three months and six months ended June 30, 2018, respectively, for the gain on the transfer of the North American Consumer Packaging business.  Also includes charges of $2 million (before and after taxes) and pre-tax charges of $25 million ($19 million after taxes) for the three months and six months ended June 30, 2018, respectively, for transaction costs to transfer the North American Consumer Packaging business.

 


INTERNATIONAL PAPER COMPANY
Reconciliation of Net Earnings (Loss) Attributable to International Paper Company to Adjusted Operating Earnings
Preliminary and Unaudited
(In millions, except per share amounts)
















Three Months Ended
June 30,


Three Months Ended
March 31,


Six Months Ended
June 30,




2019


2018


2019


2019


2018


Net Earnings (Loss) Attributable to International Paper Company


$      292


$      405


$

424


$        716


$

1,134


Less: Discontinued operations (gain) loss



23




(345)


Earnings (Loss) from Continuing Operations, including non-controlling
interest


292


428


424


716


789


Add back: Non-operating pension expense


6


27


8


14


30


Add back: Special items expense (income)


162


43


15


177


74


Adjusted Operating Earnings


$      460


$      498


$

447


$

907


$

893










Three Months Ended
June 30,


Three Months Ended
March 31,


Six Months Ended
June 30,




2019


2018


2019


2019


2018


Diluted Earnings per Common Share as Reported


$     0.73


$     0.97


$

1.05


$       1.78


$     2.71


Less: Discontinued operations (gain) loss



0.05




(0.83)


Continuing Operations


0.73


1.02


1.05


1.78


1.88


Add back: Non-operating pension expense


0.01


0.07


0.02


0.03


0.07


Add back: Special items expense (income)


0.41


0.10


0.04


0.45


0.18


Adjusted Operating Earnings per Share


$     1.15


$     1.19


$

1.11


$       2.26


$     2.13














Notes:























The Company calculates Adjusted Operating Earnings (non-GAAP) by excluding the after-tax effect of non-operating pension expense, items considered by management to be unusual
as reflected in the notes to the Consolidated Statement of Operations and discontinued operations from the earnings reported under U.S. generally accepted accounting principles
("GAAP"). Management uses this measure to focus on on-going operations, and believes that it is useful to investors because it enables them to perform meaningful comparisons of past
and present consolidated operating results. International Paper believes that using this information, along with net earnings, provides for a more complete analysis of the results of
operations by quarter. Net earnings attributable to International Paper is the most directly comparable GAAP measure.




Since diluted earnings per share are computed independently for each period, six-month per share amounts may not equal the sum of respective quarters.

 

INTERNATIONAL PAPER COMPANY
Sales and Earnings by Business Segment
Preliminary and Unaudited
(In millions)




Net Sales by Business Segment















Three Months Ended
June 30,


Three Months Ended
March 31,


Six Months Ended
June 30,





2019


2018


2019


2019


2018



Industrial Packaging


$   3,864


$  4,022


$                        3,832


$    7,696


$      7,849



Global Cellulose Fibers


661


692


689


1,350


1,369



Printing Papers


1,088


1,060


1,065


2,153


2,113



Corporate and Inter-segment Sales


54


59


57


111


123



Net Sales


$   5,667


$  5,833


$                        5,643


$  11,310


$    11,454



Operating Profit by Business Segment















Three Months Ended
June 30,


Three Months Ended
March 31,


Six Months Ended
June 30,





2019


2018


2019


2019


2018



Industrial Packaging


$      507

(a)

$     537

(f)

$                           404

(a)

$       911

(a)

$         974

(f)


Global Cellulose Fibers


(2)

(b)

66

(g)

32

(b)

30

(b)

77

(g)


Printing Papers


(33)

(c)

94


143

(c)

110

(c)

158



Total Business Segment Operating Profit


$      472


$     697


$                           579


$    1,051


$      1,209
















Earnings (Loss) From Continuing Operations Before Income Taxes
and Equity Earnings


$      334


$     490


$                           418


$       752


$         846



Interest expense, net


122

(d)

133


133


255

(d)

268



Noncontrolling interest/equity earnings adjustment (i)


5

(e)

(4)


(3)


2

(e)

(5)



Corporate expenses, net


3


30


21


24


39



Corporate special items, net



12

(h)



21

(h)


Non-operating pension expense


8


36


10


18


40



Adjusted Operating Profit


$      472


$     697


$                           579


$    1,051


$      1,209



Equity Earnings (Loss) in Ilim S.A., Net of Taxes


$        67


$       57


$                           101


$       168


$         149



Equity Earnings (Loss) in Graphic Packaging International Partners, LLC


$        14


$       15


$                             13


$          27


$           17















(a)

Includes charges of $8 million for each of the three months ended June 30, 2019 and March 31, 2019 and $16 million for the six months ended June 30, 2019 for the removal of abandoned property at our mills, a charge of $16 million for the three months ended March 31, 2019 and six months ended June 30, 2019 for costs associated with a multi-employer pension plan exit liability and a gain of $7 million for the three months ended March 31, 2019 and the six months ended June 30, 2019 related to the sale of a box plant in our EMEA Packaging business.



(b)

Includes charges of $2 million, $3 million and $5 million for the three months ended June 30, 2019 and March 31, 2019 and the six months ended June 30, 2019, respectively, for the removal of abandoned property at our mills.



(c)

Includes a loss of $95 million for the three months and six months ended June 30, 2019 related to the foreign currency cumulative translation adjustment resulting from the classification of the net assets of our India Papers business as held for sale, a loss of $57 million, partially offset by the allocation of loss to noncontrolling interest of $7 million, for the three months and six months ended June 30, 2019 for the impairment of the net assets of our India Papers business, a charge of $1 million for each of the three months ended June 30, 2019 and March 31, 2019 and $2 million for the six months ended June 30, 2019 for accelerated depreciation associated with the announced conversion of a paper machine at our Riverdale mill to containerboard production and a charge of $1 million for the three months and six months ended June 30, 2019 for the removal of abandoned property at our mills.



(d)

Includes a charge of $1 million for the three months and six months ended June 30, 2019 for interest expense associated with foreign tax audits.



(e)

Includes the allocation of loss to noncontrolling interest of $7 million for the three months and six months ended June 30, 2019  associated with the impairment of the net assets of our India Papers business.



(f)

Includes charges of $26 million and $48 million for the three months and six months ended June 30, 2018, respectively, related to the optimization of our EMEA Packaging business and charges of $6 million and $11 million for the three months and six months ended June 30, 2018, respectively, for the removal of abandoned property at our mills and other costs.



(g)

Includes charges of $3 million and $7 million for the three months and six months ended June 30, 2018, respectively, for the removal of abandoned property at our mills and other costs.



(h)

Includes charges of $12 million for the three months and six months ended June 30, 2018 associated with our proposal to acquire Smurfit Kappa and a charge of $9 million for the six months ended June 30, 2018 for a legal settlement.



(i)

Operating profits for business segments include each segment's percentage share of the profits of subsidiaries included in that segment that are less than wholly owned. The pre-tax noncontrolling interest and equity earnings for these subsidiaries are adjusted here to present consolidated earnings before income taxes and equity earnings.

 

INTERNATIONAL PAPER COMPANY
Reconciliation of Operating Profit to Operating Profit Before Special Items
Preliminary and Unaudited
(In millions)








Three Months Ended June 30, 2019




Industrial
Packaging


Global
Cellulose
Fibers


Printing
Papers


Total


Operating Profit (Loss) as Reported


$         507


$             (2)


$         (33)


$         472


Special Items Expense (Income) (a)


8


2


147


157


Operating Profit (Loss) Before Special Items


$         515


$             —


$         114


$         629







Three Months Ended June 30, 2018




Industrial
Packaging


Global
Cellulose
Fibers


Printing
Papers


Total


Operating Profit (Loss) as Reported


$          537


$              66


$            94


$           697


Special Items Expense (Income) (b)


32


3



35


Operating Profit (Loss) Before Special Items


$          569


$              69


$            94


$           732







Three Months Ended March 31, 2019




Industrial
 Packaging


Global
Cellulose
Fibers


Printing
Papers


Total


Operating Profit (Loss) as Reported


$          404


$              32


$          143


$           579


Special Items Expense (Income) (a)


17


3


1


21


Operating Profit (Loss) Before Special Items


$          421


$              35


$          144


$           600


















Six Months Ended June 30, 2019




Industrial
Packaging


Global
Cellulose
Fibers


Printing
Papers


Total


Operating Profit (Loss) as Reported


$         911


$             30


$         110


$      1,051


Special Items Expense (Income) (a)


25


5


148


178


Operating Profit (Loss) Before Special Items


$         936


$             35


$         258


$      1,229







Six Months Ended June 30, 2018




Industrial
Packaging


Global
Cellulose
Fibers


Printing
Papers


Total


Operating Profit (Loss) as Reported


$          974


$              77


$          158


$        1,209


Special Items Expense (Income) (b)


59


7



66


Operating Profit (Loss) Before Special Items


$       1,033


$              84


$          158


$        1,275











(a)

See footnotes (a) - (c) on Sales and Earnings by Business Segment

(b)

See footnotes (f) - (g) on Sales and Earnings by Business Segment

















The Company calculates Operating Profit Before Special Items (non-GAAP) by excluding the pre-tax effect of items considered by management to be unusual from the earnings reported under U.S. generally accepted accounting principles ("GAAP"). Management uses this measure to focus on on-going operations, and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results. International Paper believes that using this information, along with net earnings, provides for a more complete analysis of the results of operations by quarter. Net earnings attributable to International Paper is the most directly comparable GAAP measure.

 

INTERNATIONAL PAPER COMPANY
Sales Volume by Product (a)
Preliminary and Unaudited


International Paper Consolidated














Three Months Ended
June 30,


Three Months Ended
March 31,


Six Months Ended
June 30,




2019


2018


2019


2019


2018


Industrial Packaging (In thousands of short tons)












Corrugated Packaging (c)


2,624


2,724


2,535


5,159


5,303


Containerboard


707


800


697


1,404


1,583


Recycling


625


597


609


1,234


1,134


Saturated Kraft


52


52


41


93


98


Gypsum /Release Kraft


49


67


51


100


120


Bleached Kraft


5


9


7


12


16


EMEA Packaging (c)


379


387


370


749


784


Brazilian Packaging  (c)


91


85


85


176


171


European Coated Paperboard


102


90


104


206


186


Industrial Packaging


4,634


4,811


4,499


9,133


9,395


Global Cellulose Fibers (In thousands of metric tons) (b)


869


884


859


1,728


1,779


Printing Papers (In thousands of short tons)












U.S. Uncoated Papers


441


484


448


889


954


European & Russian Uncoated Papers


367


342


354


721


703


Brazilian Uncoated Papers


283


265


244


527


525


Indian Uncoated Papers


66


66


68


134


133


Printing Papers


1,157


1,157


1,114


2,271


2,315













(a)

Sales volumes include third party and inter-segment sales and exclude sales of equity investees.



(b)

Includes North American, European and Brazilian volumes and internal sales to mills.




(c)

Volumes for corrugated box sales reflect consumed tons sold (CTS). Board sales by these businesses reflect invoiced tons.

 

INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In millions)



June 30, 2019


December 31, 2018

Assets





Current Assets





Cash and Temporary Investments


$                       787


$                          589

Accounts and Notes Receivable, Net


3,477


3,521

Contract Assets


399


395

Inventories


2,224


2,241

Assets Held for Sale


286


Other


215


250

Total Current Assets


7,388


6,996

Plants, Properties and Equipment, Net


12,962


13,067

Forestlands


405


402

Investments


1,646


1,648

Financial Assets of Variable Interest Entities


7,079


7,070

Goodwill


3,441


3,374

Right of Use Assets


408


Deferred Charges and Other Assets


1,018


1,019

Total Assets


$                  34,347


$                     33,576

Liabilities and Equity





Current Liabilities





Notes Payable and Current Maturities of Long-Term Debt


$                       676


$                          639

Accounts Payable and Other Current Liabilities


4,123


4,055

Liabilities Held for Sale


250


Total Current Liabilities


5,049


4,694

Long-Term Debt


10,050


10,015

Nonrecourse Financial Liabilities of Variable Interest Entities


6,302


6,298

Deferred Income Taxes


2,624


2,600

Pension Benefit Obligation


1,694


1,762

Postretirement and Postemployment Benefit Obligation


257


264

Long-term Lease Obligations


281


Other Liabilities


591


560

Equity





Invested Capital, Net of Treasury Stock


(820)


(103)

Retained Earnings


8,302


7,465

Total International Paper Shareholders' Equity


7,482


7,362

Noncontrolling interests


17


21

Total Equity


7,499


7,383

Total Liabilities and Equity


$                  34,347


$                     33,576

 

INTERNATIONAL PAPER COMPANY
Consolidated Statement of Cash Flows
Preliminary and Unaudited
(In millions)



Six Months Ended June 30,



2019


2018

Operating Activities





Net earnings (loss)


$                       712


$                     1,137

Depreciation, amortization and cost of timber harvested


636


655

Deferred income tax expense (benefit), net


50


196

Restructuring and other charges, net



48

Net gain on transfer of North American Consumer Packaging business



(488)

Net (gains) losses on sales and impairments of businesses


145


Equity method dividends received


251


122

Equity (earnings) losses, net


(194)


(165)

Periodic pension expense, net


47


115

Other, net


55


57

Changes in current assets and liabilities





Accounts and notes receivable


48


(333)

Contract assets


(4)


(17)

Inventories


48


(26)

Accounts payable and accrued liabilities


2


142

Interest payable


1


2

Other


3


19

Cash Provided By (Used For) Operating Activities


1,800


1,464

Investment Activities





Invested in capital projects


(628)


(929)

Acquisitions, net of cash acquired


(99)


Net settlement on transfer of North American Consumer Packaging business



(40)

Proceeds from divestitures, net of cash divested


17


Proceeds from sale of fixed assets


4


2

Other


(9)


3

Cash Provided By (Used For) Investment Activities


(715)


(964)

Financing Activities





Repurchases of common stock and payments of restricted stock tax withholding


(460)


(331)

Issuance of debt


444


411

Reduction of debt


(452)


(73)

Change in book overdrafts


(14)


(24)

Dividends paid


(398)


(393)

Net debt tender premiums paid


4


Cash Provided By (Used for) Financing Activities


(876)


(410)

Cash Included in Assets Held for Sale


(21)


Effect of Exchange Rate Changes on Cash


10


(35)

Change in Cash and Temporary Investments


198


55

Cash and Temporary Investments





Beginning of the period


589


1,018

End of the period


$                       787


$                     1,073

 

INTERNATIONAL PAPER COMPANY
Reconciliation of Cash Provided by Operations to Free Cash Flow
Preliminary and Unaudited
(In millions)




Three Months Ended
June 30,


Six Months Ended
June 30,



2019


2018


2019


2018


Cash Provided By (Used For) Operating Activities

$     1,067


$         801


$         1,800


$         1,464


Adjustments:









Cash invested in capital projects

(335)


(440)


(628)


(929)


Free Cash Flow

$        732


$         361


$         1,172


$            535











Free cash flow is a non-GAAP measure and the most directly comparable GAAP measure is cash provided by operations. Management believes that free cash flow is useful to investors as a liquidity measure because it measures the amount of cash generated that is available, after reinvesting in the business, to maintain a strong balance sheet, pay dividends, repurchase stock, service debt and make investments for future growth. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. By adjusting for certain items that are not indicative of the Company's ongoing performance, free cash flow also enables investors to perform meaningful comparisons between past and present periods.



 

 

Cision

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