International Paper Reports First Quarter 2022 Results

"International Paper's earnings in the first quarter were better than our outlook. We generated strong cash from operations and returned $580 million to shareowners." – Mark Sutton, Chairman and CEO of International Paper.

April 28, 2022 - International Paper today reported first quarter 2022 financial results.

FIRST QUARTER 2022 HIGHLIGHTS

• First quarter net earnings (loss) attributable to International Paper of $360 million ($0.95 per diluted share) compared with $107 million ($0.28 per diluted share) in the fourth quarter of 2021 and $349 million ($0.88 per diluted share) in the first quarter of 2021. First quarter adjusted operating earnings* (non-GAAP) of $288 million ($0.76 per diluted share) compared with $301 million ($0.78 per diluted share) in the fourth quarter of 2021 and $198 million ($0.50 per diluted share) in the first quarter of 2021.
• $40 million of earnings achieved from Building a Better IP initiatives
• 14% year-over-year revenue growth
• First quarter cash provided by operations of $588 million
• Share repurchases of $406 million
• Actively pursuing strategic options, including a sale of equity investment in Ilim Group

"International Paper's earnings in the first quarter were better than our outlook. We generated strong cash from operations and returned $580 million to shareowners, including $406 million of share repurchases," said Mark Sutton, Chairman and Chief Executive Officer. "Commercially and operationally we performed well in the quarter to overcome significantly higher input costs. Looking ahead to the second quarter, we anticipate stable demand at elevated levels. We expect margin expansion as realization of prior price movements begins to outpace higher costs, and we step down from our highest maintenance outage quarter of the year."

Sutton added, "We are accelerating value creation through our Building a Better IP set of initiatives and are confident in our full-year target of $200 to $225 million of incremental earnings. In the first quarter we achieved $40 million of earnings through these actions."

SEGMENT INFORMATION

Business segment operating profits are used by International Paper's management to measure the earnings performance of its businesses and is calculated as set forth in footnote (d) below under "Sales and Earnings by Business Segment". As a result of the spin-off of our global Printing Papers business on October 1, 2021, the Printing Papers business segment has been eliminated and all prior year amounts have been adjusted to reflect this business as a discontinued operation.

Industrial Packaging operating profits (losses) in the first quarter of 2022 were $397 million compared with $414 million in the fourth quarter of 2021. In North America, earnings decreased as higher sales prices for corrugated boxes and containerboard were more than offset by higher planned maintenance outage expenses. Sales volumes were lower for corrugated boxes and export containerboard reflecting fewer shipping days. Input costs were stable as higher freight costs were offset by lower recovered fiber costs. Earnings in both the first quarter of 2022 and the fourth quarter of 2021 benefited from insurance recoveries. In Europe, sales volumes were stable, and higher average sales prices in the Eurozone were more than offset by lower average sales margins in Morocco and significantly higher energy costs.

Global Cellulose Fibers operating profits (losses) in the first quarter of 2022 were $(49) million compared with $1 million in the fourth quarter of 2021. Earnings were impacted by continuing supply chain challenges, seasonally higher operating costs and higher input costs for wood, chemicals and energy. Sales volumes were slightly lower. Average sales prices were higher for both fluff pulp and market pulp. Planned maintenance outage expenses were higher.

EQUITY METHOD INVESTMENTS

Ilim joint venture equity earnings (losses) were $93 million in the first quarter of 2022 compared with $66 million in the fourth quarter of 2021. Operationally, earnings increased driven by higher sales volumes of softwood pulp and hardwood pulp to China. Sales to other export markets decreased significantly driven by the current geopolitical conditions. During the first quarter of 2022, the Company announced its intention to explore strategic options, including a sale of its 50% ownership in Ilim S.A.

CORPORATE EXPENSES

Corporate expenses were $12 million for the first quarter of 2022, compared with $49 million in the fourth quarter of 2021.

EFFECTIVE TAX RATE

The reported effective tax rate for the first quarter of 2022 was 26%, compared to a 2021 fourth quarter reported effective tax rate of (11)%. The effective tax rate in the fourth quarter included the tax benefit associated with debt extinguishment costs of $238 million and tax benefits recognized after the finalization of the 2020 state and local income tax returns.

Excluding special items and non-operating pension expense, the operational effective tax rate for the first quarter of 2022 was 27%, compared with 20% for the fourth quarter of 2021. The operational effective tax rate in the fourth quarter of 2021was lower due to the inclusion of tax benefits recognized after the finalization of the 2020 state and local tax returns.

EFFECTS OF SPECIAL ITEMS

Net special items in the first quarter of 2022 amount to a net after-tax gain of $35 million ($0.09 per diluted share) compared with a charge of $222 million ($0.58 per diluted share) in the fourth quarter of 2021 and a gain of $30 million ($0.08 per diluted share) in the first quarter of 2021.

DISCONTINUED OPERATIONS

Discontinued operations include the operating earnings of our former Printing Papers segment and EMEA Coated Paperboard and Pulp business including the Kwidzyn, Poland mill, divested in the third quarter of 2021.

International Paper's complete First Quarter 2022 Results can be found on the company's website: www.internationalpaper.com.

International Paper (NYSE: IP) is a leading global supplier of renewable fiber-based products. We produce corrugated packaging products that protect and promote goods, and enable worldwide commerce, and pulp for diapers, tissue and other personal care products that promote health and wellness. Headquartered in Memphis, Tennessee, IP employs approximately 38,000 colleagues globally. To learn more, visit: www.internationalpaper.com.

SOURCE: International Paper