INTERNATIONAL PAPER CO NEW
For the period ended Sep 30, 2024. Filed Nov 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 1, 2024
IP$34.53+0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-26.
0000051434-24-000053
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsBusiness Segment Operating ResultsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-01.
0000051434-24-000067
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsBusi ness Segment Operating ResultsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 104 previous paragraphs and 118 current paragraphs.
48 unchanged; 50 reworded; 15 added; 6 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
During 2024, the Company began implementing an 80/20 strategic approach to drive transformational performance. Through the 80/20 strategic approach, we intend to deliver profitable market share growth by striving to be the lowest-cost producer and the most reliable and innovative sustainable packaging solutions provider to our customers across North America and EMEA. As part of the Company’s 80/20 strategic approach, the Company intends to guide investments and align resources to win with customers, while reducing complexity and cost across the Company. We took actions in the third quarter, including the initiation of a corporate overhead restructuring plan aimed at better aligning our workforce with the needs of the business and our customers, optimizing our organizational structure and reducing operating costs. We also expect incremental restructuring costs in the fourth quarter of 2024 in connection with this plan. We expect significant earnings benefit in 2025 from these restructuring actions. Additionally, we continue to make investments to strengthen our most competitive and strategic assets, along with facility closures to structurally reduce operating costs. This includes the closure of five packaging plants in our North American Industrial Packaging business planned for the fourth quarter of 2024, along with the closure of our Georgetown, South Carolina pulp and paper mill in our Global Cellulose Fibers business. In addition, we announced in October that we are exploring strategic options for our Global Cellulose Fibers business. Finally, we continue to make progress towards our announced acquisition of DS Smith with the expectation that the transaction will close early in the first quarter of 2025.
Current report
Restructuring Actions
Current report
On October 15, 2024, the Company announced a corporate overhead restructuring plan aimed at reducing operating costs, optimizing our organizational structure, and better aligning our workforce with the needs of our business and customers. The majority of this corporate overhead restructuring plan is expected to be substantially implemented in the three months ended December 31, 2024.
Current report
Under this corporate overhead restructuring plan, the Company plans to reduce its workforce by approximately 650 employees. The Company estimates it will incur aggregate pre-tax restructuring charges of approximately $80 million related to one-time severance payments and other employee termination benefits, with $49 million of such charges recorded in the three months ended September 30, 2024, and approximately $30 million of such charges anticipated to be recorded in the three months ended December 31, 2024.
Current report
In addition, as set forth below under Part II, Item 5 of this Form 10-Q, on October 31, 2024, the Company announced that it plans to permanently close its pulp and paper mill in Georgetown, South Carolina. The mill will shut down in stages with all operations expected to cease by year end. The Company estimates that the closure will result in aggregate pre-tax charges of approximately $270 million, comprised of noncash accelerated depreciation of approximately $220 million and severance and other shutdown charges of approximately $50 million. The Company anticipates that these charges will be recorded during the three months ending December 31, 2024. The Company expects closure of this mill to reduce its workforce by approximately 675 employees.
Current report
On October 31, 2024, the Company completed the sale of the permanently closed Orange, Texas containerboard mill, the initial closure of which was announced in a Current Report on Form 8-K filed by the Company on October 28, 2023, for approximately $85 million in cash. The Company expects to recognize an approximately $60 million gain in the fourth quarter of 2024 on the sale of the mill.
Current report
Moreover, as noted above, we plan to close five packaging facilities in our North American Industrial Packaging business in the fourth quarter of 2024. We incurred pre-tax restructuring charges of approximately $7 million related to these actions during the three months ended September 30, 2024, and anticipate recording approximately $18 million of additional pre-tax restructuring charges and approximately $15 million of accelerated depreciation associated with these actions during the three months ended December 31, 2024.
Current report
Review of Strategic Options for Global Cellulose Fibers Business
Current report
On October 31, 2024, the Company announced that we are reviewing strategic options for our global cellulose fibers business. The decision to explore alternatives for this business is consistent with the Company’s strategy to focus on sustainable packaging solutions. There can be no assurance that this review will result in any kind of transaction or other outcome. The Company intends to provide updates on the progress of its review only if and when it deems further disclosure is required or appropriate.
Current report
Contemplated Acquisition of DS Smith
Current report
In connection with the Share Issuance, the Company, on September 11, 2024, published a prospectus in accordance with the Prospectus Regulation Rules of the U.K. Financial Conduct Authority (the “FCA”) made under Section 73A of the U.K. Financial Services and Markets Act 2000, as amended (the “U.K. Prospectus”), which the Company intends to supplement in accordance with the Prospectus Regulation Rules. The U.K. Prospectus relates to the admission of the shares of the Company Common Stock to the equity shares (international commercial companies secondary listing) category of the Official List of the FCA and to trading on the main market for listed securities of the London Stock Exchange in connection with the Business Combination. Also on September 11, 2024, DS Smith published a scheme document (the “U.K. Scheme Document”) prepared in accordance with Part 26 of the UK Companies Act 2006, containing the full terms and conditions of the Business Combination. On October 7, 2024, DS Smith announced that the shareholders of DS Smith voted to approve the proposals related to the Business Combination at a meeting of the DS Smith shareholders.
Current report
The Company filed its definitive proxy statement on Schedule 14A with the SEC on September 12, 2024 (together with any amendments and supplements thereto, the “Definitive Proxy Statement”) related to the Share Issuance. On October 11, 2024, International Paper announced that the shareholders of the Company voted to approve the Share Issuance at a duly convened special meeting of the shareholders of the Company.
Current report
The Business Combination remains subject to the satisfaction or waiver of the conditions described in the Definitive Proxy Statement, including among other things, antitrust clearance from the European Commission. International Paper and DS Smith continue to work collaboratively with the European Commission with a view to obtaining the requisite clearance. The Business Combination is expected to become effective (subject to all Conditions being satisfied) early in the first quarter of 2025.
Current report
Compared to the third quarter of 2023, cost of products sold in the third quarter of 2024 decreased by $3 million or less than 1%. Net special items charges of $29 million in the third quarter of 2023 are included in cost of products sold. Cost of products sold also includes higher raw material and maintenance expense of $135 million, partially offset by lower fuel and packaging expense as well as lower inventory adjustments of $116 million.
Current report
During the third quarter of 2024, the Company had debt reductions of $25 million which included the repayment of approximately $22 million EDB with an interest rate of 1.90% that matured on August 1, 2024, and $3 million related to decreases in the amount of capital leases.
Removed paragraphs (6)
Previous report
International Paper delivered improved earnings in the second quarter of 2024 on higher sales prices across the portfolio along with higher volumes on improved box demand. We were encouraged to see stable to moderately improved industry demand across various customer markets we serve. Even with the stable demand environment positively impacting volumes, our Industrial Packaging volumes performance came in below expectations and continued to lag the overall packaging market. We realized some additional benefits from our Box Go-to-Market strategy, but we believe that the second quarter performance also reflects the lagging residual effect of under investing in certain areas where, as a result, there have been ongoing reliability and capacity issues. Over the past year, we have been investing more in our box system and we are seeing improvement in key metrics such as customer on-time delivery and machine productivity. Fixing these issues continues to be a particular focus in future periods but in the near term, specifically the third quarter 2024, earnings are expected to be negatively impacted by this reset along with higher maintenance outage expense and seasonally lower sales volumes. In order to accelerate improvement, we are deploying an 80/20 strategic approach. We intend to make the changes needed to focus our portfolio, become excellent with our customers and optimize our costs to deliver profitable growth. In North America, our investments will center on providing customers with the most reliable and innovative packaging solutions.
Previous report
Operations and costs are expected to be higher on increased reliability spending, labor and benefits costs during the summer months, timing of maintenance spend, and higher unabsorbed fixed costs. Maintenance outage expense is expected to be higher in the third quarter of 2024 while input costs are also expected to be higher on increased energy costs. In our Global Cellulose Fibers business, we expect price and mix to increase earnings on prior index movements. Volume is expected to be lower on seasonally lower demand. Operations and costs are expected to be higher due to higher distribution costs, timing of maintenance spend, as well as higher unabsorbed fixed costs. Maintenance outage expense is expected to be lower while input costs are expected to be stable relative to the second quarter of 2024.
Previous report
Cost of products sold was flat in the second quarter of 2024 compared to the second quarter of 2023. There were no special items charges included in cost of products sold in the second quarter of 2023. While the overall change in cost of products sold was flat, there were decreases in packaging, fuel and utility expense and other adjustments of $60 million, partially offset by increases in raw material and maintenance expense of $35 million.
Previous report
Compared to the first quarter of 2024, depreciation and amortization in the second quarter of 2024 decreased by $17 million or 6%. The decrease in the second quarter of 2024 compared to the first quarter of 2024 was primarily driven by depreciation related to the write-down of fixed assets for the Ixtac, Mexico box plant fire in the first quarter of 2024.
Previous report
Compared to the first quarter of 2024, interest expense, net in the second quarter of 2024 increased by $9 million or 20%. Net special items income of $10 million is included in interest expense, net in the first quarter of 2024.
Reworded paragraphs (50)
Previous wording
Net earnings (loss) were $498 million ($1.41 per diluted share) in the second quarter of 2024, compared with $56 million ($0.16 per diluted share) in the first quarter of 2024 and $235 million ($0.68 per diluted share) in the second quarter of 2023. The Company generated Adjusted operating earnings (a non-GAAP measure defined below) of $193 million ($0.55 per diluted share) in the second quarter of 2024, compared with $61 million ($0.17 per diluted share) in the first quarter of 2024 and $204 million ($0.59 per diluted share) in the second quarter of 2023.
Current wording
Net earnings (loss) were $150 million ($0.42 per diluted share) in the third quarter of 2024, compared with $498 million ($1.41 per diluted share) in the second quarter of 2024 and $165 million ($0.47 per diluted share) in the third quarter of 2023. The Company generated Adjusted operating earnings (a non-GAAP measure defined below) of $153 million ($0.44 per diluted share) in the third quarter of 2024, compared with $193 million ($0.55 per diluted share) in the second quarter of 2024 and $224 million ($0.64 per diluted share) in the third quarter of 2023.
Previous wording
Comparing our performance in the second quarter of 2024 to the first quarter of 2024, price and mix in our Industrial Packaging business was higher due to the realization of benefits from prior index movements. We believe that the improved price and mix also reflects the benefits from our Box Go-to-Market Strategy along with higher export pricing and mix. Price and mix in our Global Cellulose Fibers business was higher due to prior index movement and the GCF optimization strategy driving benefits from higher absorbent pulp mix, and a reduction in commodity grades. Volume in our Industrial Packaging business was higher in the second quarter on a stable to improving demand trend. However, our Box Go-to-Market Strategy is about making choices that are expected to adversely impact our volume in the near term but are intended to allow us to improve our margins and mix over the long term. Although we expect to trail the industry for the next few quarters in unit volume growth, we expect the volume impacts to be temporary, as we continue to transition toward our target mix of customers and invest in the business to maximize profitability. Volume in our Global Cellulose Fibers business was sequentially flat overall, as improved demand for absorbent pulp was offset by lower sales of commodity grades, as we continued to focus on strategically aligning our business with the most attractive customers and end markets. Operations and costs were sequentially higher in our Industrial Packaging business due to the impacts of inflation, seasonally higher selling and administration costs and higher spending to improve reliability. Operations and costs in our Global Cellulose Fibers business were lower due in large part to lower fixed costs resulting from the closure of the pulp machine at our Riegelwood, North Carolina mill. Planned maintenance outages were marginally higher in our Industrial Packaging business while lower in our Global Cellulose Fibers business. Input costs were flat in our Industrial Packaging business as lower energy costs offset higher recovered fiber costs. Input costs in our Global Cellulose Fibers business were slightly higher, primarily driven by higher chemical and wood costs partially offset by lower energy costs.
Current wording
International Paper delivered solid earnings in the third quarter of 2024 on higher sales prices across the portfolio including benefits from our box go-to-market strategy, along with a moderately improving box demand environment. Comparing our performance in the third quarter of 2024 to the second quarter of 2024, price and mix in our Industrial Packaging business was higher due to the realization of benefits from prior index movements along with the margin improvements from our box go-to-market strategy. Price and mix in our Global Cellulose Fibers business was higher due to prior index movements. Although we see moderately improving demand trends, volume in our Industrial Packaging business was seasonally lower, as expected, and we continue to deploy our commercial strategies across the portfolio. Volume in our Global Cellulose Fibers business was sequentially flat overall, as improved demand for absorbent pulp was offset by lower sales of commodity grades, as we continued to focus on strategically aligning our business with the most attractive customers and end markets. Operations and costs were sequentially higher in our Industrial Packaging business due to seasonally higher labor costs, higher employee incentive compensation, the impacts of reliability incidents, increased maintenance spending and weather events. Operations and costs in our Global Cellulose Fibers business were higher due to mill reliability incidents, higher employee incentive compensation and timing of spending. Planned maintenance outages were higher in our Industrial Packaging business while lower in our Global Cellulose Fibers business. Input costs were higher in our Industrial Packaging business driven by higher energy and wood costs. Input costs in our Global Cellulose Fibers business were flat as lower energy and chemical costs were offset by higher wood costs.
Previous wording
Looking ahead to the third quarter of 2024, as compared to the second quarter of 2024, in our Industrial Packaging business, we expect price and mix to improve earnings from prior index movements in North America and higher export prices to date. We also expect incremental benefit from continued progress with our Box Go-to-Market strategy. Volume is expected to be lower in North America on one less shipping day versus the second quarter of 2024 along with seasonally lower daily demand.
Current wording
Looking ahead to the fourth quarter of 2024, as compared to the third quarter of 2024, in our Industrial Packaging business, we expect price and mix to improve earnings from prior index movements in North America and along with some incremental benefit from continued progress with our box go-to-market strategy. Volume is expected to be lower in North America with two less shipping days versus the third quarter of 2024, partially offset by seasonally higher daily demand. Operations and costs are expected to be slightly lower on improved performance and reliability, partially offset by higher seasonal costs and the non-repeat of favorable non-recurring items in the third quarter of 2024. We expect fourth quarter earnings will be impacted by accelerated depreciation associated with the closure of five packaging facilities in the fourth quarter of 2024. Maintenance outage expense is expected to be lower in the fourth quarter of 2024. Input costs are also expected to be lower on decreased recovered fiber and wood costs. In our Global Cellulose Fibers business, we expect price and mix to decrease earnings on prior index movements. Volume is expected to be stable. Operations and costs are expected to be marginally lower on improved performance and reliability which will largely be offset by higher seasonal costs along with higher distribution costs. Fourth quarter earnings will be significantly impacted from approximately $220 million of accelerated depreciation charges associated with the closure of the Georgetown, South Carolina pulp and paper mill anticipated to be incurred in the fourth quarter of 2024. Maintenance outage expense is expected to be higher while input costs are expected to be stable relative to the third quarter of 2024.
Previous wording
We continue to make progress towards our announced acquisition of DS Smith with the expectation that the transaction will close in the fourth quarter of 2024. As previously disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission, on April 16, 2024, the Company issued an announcement, pursuant to Rule 2.7 of the United Kingdom City Code on Takeovers and Mergers, disclosing the terms of a recommended offer by the Company to acquire the entire issued and to be issued share capital of DS Smith Plc ("DS Smith"), a public limited company incorporated in England and Wales, in an all-stock transaction (the “Business Combination”). For more information on the announcement, please see Note 8 - Acquisitions and our public filings with the SEC. The Company expects to effect the Business Combination by way of scheme of arrangement under the laws of England and Wales, such that the issuance of Company shares is not expected to require registration under the U.S. Securities Act of 1933, as amended. In connection with the proposed share issuance, the Company expects the required disclosure documents related to the Business Combination will be published, and the related meetings held, in late summer/early autumn.
Current wording
We continue to make progress toward our announced acquisition of DS Smith Plc, a public limited company incorporated in England and Wales ("DS Smith"), having achieved significant milestones during the third quarter of 2024. As previously disclosed in our Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”), on April 16, 2024, the Company issued an announcement, pursuant to Rule 2.7 of the United Kingdom City Code on Takeovers and Mergers, disclosing the terms of a recommended offer by the Company to acquire the entire issued and to be issued share capital of DS Smith in an all-stock transaction (the “Business Combination”). For more information on the announcement, please see Note 8 - Acquisitions and our public filings with the SEC. The Company expects to effect the Business Combination by way of a scheme of arrangement under the laws of England and Wales, such that the proposed issuance (the “Share Issuance”) of new shares of common stock of the Company, par value $1.00 per share (the “Company Common Stock”) to the shareholders of DS Smith in connection with the Business Combination is not expected to require registration under the U.S. Securities Act of 1933, as amended.
Previous wording
Adjusted Operating Earnings and Adjusted Operating Earnings Per Share are non-GAAP measures defined as net earnings (loss) (a GAAP measure) excluding discontinued operations, net special items and non-operating pension expense (income). Net earnings (loss) and Diluted earnings (loss) per share are the most directly comparable GAAP measures. The Company calculates Adjusted Operating Earnings by excluding the after-tax effect of discontinued operations, non-operating pension expense (income) and net special items, as described in greater detail below, from net earnings (loss) reported under GAAP. Adjusted Operating Earnings Per Share is calculated by dividing Adjusted Operating Earnings by diluted average shares of common stock outstanding. Management uses these non-GAAP measures to focus on ongoing operations and believes that such non-GAAP measures are useful to investors in assessing the operational performance of the Company and enabling investors to perform meaningful comparisons of past and present consolidated operating results from continuing operations. The Company believes that using these non-GAAP measures, along with the most direct comparable GAAP measures, provides for a more complete analysis of the Company's results of operations.
Current wording
Adjusted Operating Earnings and Adjusted Operating Earnings Per Share are non-GAAP measures defined as net earnings (loss) (a GAAP measure) excluding discontinued operations, net special items and non-operating pension expense (income). Net earnings (loss) and Diluted earnings (loss) per share are the most directly comparable GAAP measures. The Company calculates Adjusted Operating Earnings by excluding the after-tax effect of discontinued operations, non-operating pension expense (income) and net special items, as described in greater detail below, from net earnings (loss) reported under GAAP. Adjusted Operating Earnings Per Share is calculated by dividing Adjusted Operating Earnings by diluted average shares of common stock outstanding. Management uses these non-GAAP measures to focus on ongoing operations and believes that such non-GAAP measures are useful to investors in assessing the operational performance of the Company and enabling investors to perform meaningful comparisons of past and present consolidated operating results from continuing operations. The Company believes that using these non-GAAP measures, along with the most directly comparable GAAP measures, provides for a more complete analysis of the Company's results of operations.
Previous wording
(a) Special items for the three months ended June 30, 2024 include a tax benefit of $338 million related to internal legal entity restructuring. This amount also includes tax expense of $2 million on the non-operating pension income and a tax benefit of $8 million associated with special items. Special items for the three months ended June 30, 2023 include a tax benefit of $23 million related to the settlement of tax audits. This amount also includes a tax benefit of $3 million on the non-operating pension expense and tax expense of $2 million associated with special items. Special items for the three months ended March 31, 2024 includes tax expense of $3 million on the non-operating pension income and a tax benefit of $4 million associated with special items.
Current wording
(a) Special items for the three months ended September 30, 2024 include a tax benefit of $78 million related to internal legal entity restructuring. This amount also includes tax expense of $3 million on the non-operating pension income and a tax benefit of $24 million associated with special items. Special items for the three months ended September 30, 2023 include a tax benefit of $3 million on the non-operating pension expense and a tax benefit of $7 million associated with special items. Special items for the three months ended June 30, 2024 include a tax benefit of $338 million related to internal legal entity restructuring. This amount also includes tax expense of $2 million on the non-operating pension income and a tax benefit of $8 million associated with special items.
Previous wording
Cash provided by operations, including discontinued operations, totaled $760 million and $873 million for the first six months of 2024 and 2023, respectively. The Company generated free cash flow of $311 million and $265 million in the first six months of 2024 and 2023, respectively. Free cash flow is a non-GAAP measure, which equals cash provided by operations less cash invested in capital projects, and the most directly comparable GAAP measure is cash provided by (used for) operations. Management utilizes this measure in connection with managing our business and 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.
Current wording
Cash provided by operations, including discontinued operations, totaled $1.3 billion for both of the first nine months of 2024 and 2023. The Company generated free cash flow of $620 million and $505 million in the first nine months of 2024 and 2023, respectively. Free cash flow is a non-GAAP measure, which equals cash provided by operations less cash invested in capital projects, and the most directly comparable GAAP measure is cash provided by (used for) operations. Management utilizes this measure in connection with managing our business and 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.
Previous wording
The following summarizes our results of continuing operations for second quarter of 2024 compared with the first quarter of 2024 and the second quarter of 2023:
Current wording
The following summarizes our results of continuing operations for third quarter of 2024 compared with the second quarter of 2024 and the third quarter of 2023:
Previous wording
Net sales in the second quarter of 2024 increased by $115 million or 2% compared to the first quarter of 2024 and increased $52 million or 1% compared with the second quarter of 2023. The increase compared to the first quarter of 2024 was driven by higher sales prices and increased volume. The increase compared to the second quarter of 2023 was due to higher volumes. Additional details on net sales are provided in the Business Segment Operating Results section below.
Current wording
Net sales in the third quarter of 2024 decreased by $48 million or 1% compared to the second quarter of 2024 and increased $73 million or 2% compared with the third quarter of 2023. The decrease compared to the second quarter of 2024 was driven by seasonally lower sales volumes. The increase compared to the third quarter of 2023 was due to higher sales prices. Additional details on net sales are provided in the Busi ness Segment Operating Results section below.
Previous wording
Compared to the first quarter of 2024, cost of products sold in the second quarter of 2024 decreased by $64 million or 2%. Net special items charges of $25 million and $10 million in the second quarter of 2024 and the first quarter of 2024, respectively, are included in cost of products sold. The decrease was primarily driven by lower fuel and utility expense and lower inventory and other adjustments of $166 million, partially offset by increased raw material and maintenance expense of $87 million.
Current wording
Compared to the second quarter of 2024, cost of products sold in the third quarter of 2024 decreased by $18 million or 1%. Net special items charges of $7 million and $25 million in the third quarter of 2024 and the second quarter of 2024, respectively, are included in cost of products sold. Additionally, there were decreases of $55 million driven by lower sales, offset by increases in raw material, fuel and maintenance expense of $55 million.
Previous wording
Compared to the first quarter of 2024, selling and administrative expenses in the second quarter of 2024 increased by $95 million or 27%. Net special items charges of $29 million and $5 million in the second quarter of 2024 and the first quarter of 2024, respectively, are included in selling and administrative expenses. The increase in the second quarter of 2024 compared to the first quarter of 2024 was primarily driven by higher employee benefit costs including annual incentive plan compensation.
Current wording
Compared to the second quarter of 2024, selling and administrative expenses in the third quarter of 2024 increased by $55 million or 12%. Net special items charges of $51 million and $29 million in the third quarter of 2024 and the second quarter of 2024, respectively, are included in selling and administrative expenses. The increase in the third quarter of 2024 compared to the second quarter of 2024 was primarily driven by higher employee medical claims and professional fees.
Previous wording
Compared to the second quarter of 2023, selling and administrative expenses in the second quarter of 2024 increased by $117 million or 35%. There were no special items included in selling and administrative expense in the second quarter of 2023. The increase in the second quarter of 2024 compared to the second quarter of 2023 was primarily driven by higher employee benefit costs including annual incentive plan compensation.
Current wording
Compared to the third quarter of 2023, selling and administrative expenses in the third quarter of 2024 increased by $222 million or 78%. There were no special items included in selling and administrative expenses in the third quarter of 2023. The increase in the third quarter of 2024 compared to the third quarter of 2023 was primarily driven by higher employee benefit costs, including annual incentive plan compensation, and higher employee medical claims.
Previous wording
Compared to the second quarter of 2023, depreciation and amortization in the second quarter of 2024 increased by $17 million or 7%, primarily driven by depreciation recognized on the units of production method at mills with higher production.
Current wording
Compared to the second quarter of 2024, depreciation and amortization in the third quarter of 2024 increased by $6 million or 2%. The increase in the third quarter of 2024 compared to the second quarter of 2024 was primarily driven by depreciation recognized on the units of production method at mills with higher production.
Previous wording
Compared to the first quarter of 2024, distribution expenses in the second quarter of 2024 decreased by $12 million or 3%, primarily driven by lower freight expense.
Current wording
Compared to the second quarter of 2024, distribution expenses in the third quarter of 2024 decreased by $22 million or 6%, primarily driven by lower warehousing and freight expense.
Previous wording
Compared to the second quarter of 2023, distribution expenses in the second quarter of 2024 increased by $3 million or 1%, primarily driven by higher warehousing and freight expense.
Current wording
Compared to the third quarter of 2023, distribution expenses in the third quarter of 2024 decreased by $25 million or 7%, primarily driven by lower warehousing and freight expense.
Previous wording
Compared to the first quarter of 2024, taxes other than payroll and income taxes in the second quarter of 2024 decreased by $6 million or 15%, primarily driven by lower real estate and sales and use tax expense.
Current wording
Compared to the second quarter of 2024, taxes other than payroll and income taxes in the third quarter of 2024 increased by $2 million or 6%, primarily driven by higher sales and use tax expense.
Previous wording
Compared to the second quarter of 2023, taxes other than payroll and income taxes in the second quarter of 2024 decreased by $5 million or 13%, primarily driven by lower real estate tax expense.
Current wording
Compared to the third quarter of 2023, taxes other than payroll and income taxes in the third quarter of 2024 decreased by $2 million or 5%, primarily driven by lower real estate tax expense.
Previous wording
Compared to the second quarter of 2023, interest expense, net in the second quarter of 2024 decreased by $4 million or 7%. Net special items income of $6 million is included in interest expense, net in the second quarter of 2023. The decrease in the second quarter of 2024 compared to the second quarter of 2023 was primarily driven by higher interest income in the second quarter of 2024.
Current wording
Compared to the second quarter of 2024, interest expense, net in the third quarter of 2024 decreased by $4 million or 7%. The decrease in the third quarter of 2024 compared to the second quarter of 2023 was primarily driven by higher interest income in the third quarter of 2024.
Previous wording
Earnings (loss) from continuing operations totaled $498 million, or $1.41 per diluted share, in the second quarter of 2024. This compared with $56 million, or $0.16 per diluted share, in the first quarter of 2024 and $222 million, or $0.64 per diluted share, in the second quarter of 2023.
Current wording
Earnings (loss) from continuing operations totaled $150 million, or $0.42 per diluted share, in the third quarter of 2024. This compared with $498 million, or $1.41 per diluted share, in the second quarter of 2024 and $192 million, or $0.55 per diluted share, in the third quarter of 2023.
Previous wording
Compared with the first quarter of 2024, earnings from continuing operations benefited from higher average sales prices and a favorable mix ($78 million), higher sales volumes ($20 million), lower raw material and freight costs ($1 million), lower mill maintenance outage costs ($11 million), lower corporate and other costs ($1 million) and lower tax expense ($26 million). These benefits were offset by higher operating costs ($5 million), higher net interest expense ($1 million) and higher non-operating pension expense ($1 million). Equity earnings, net of taxes, were $1 million higher in the second quarter of 2024 than in the first quarter of 2024. Net special items in the second quarter of 2024 were a gain of $297 million compared with a charge of $14 million in the first quarter of 2024.
Current wording
Compared with the second quarter of 2024, earnings from continuing operations benefited from higher average sales prices net of an unfavorable mix ($102 million), lower corporate and other costs ($14 million), lower net interest expense ($3 million) and lower tax expense ($10 million) and lower non-operating pension expense ($1 million). These benefits were offset by lower sales volumes ($41 million), higher operating costs ($98 million), higher raw material and freight costs ($19 million) and higher mill maintenance outage costs ($11 million). Equity earnings, net of taxes, were flat in the third quarter of 2024 compared with the second quarter of 2024. Net special items in the third quarter of 2024 were a charge of $12 million compared with a gain of $297 million in the second quarter of 2024.
Previous wording
Compared with the second quarter of 2023, the second quarter of 2024 benefited from higher sales volumes ($16 million), lower operating costs ($4 million), lower mill maintenance outage costs ($16 million), lower net interest expense ($8 million), lower tax expense ($3 million) and lower non-operating pension expense ($17 million). These benefits were offset by lower average sales prices net of a favorable mix ($38 million), higher raw material and freight costs ($8 million) and higher corporate and other costs ($11 million). Equity earnings, net of taxes, were $1 million lower in the second quarter of 2024 compared with the second quarter of 2023. Net special items in the second quarter of 2024 were a gain of $297 million compared with a gain of $27 million in the second quarter of 2023.
Current wording
Compared with the third quarter of 2023, the third quarter of 2024 benefited from higher average sales prices and a favorable mix ($194 million), lower corporate and other costs ($13 million), lower net interest expense ($6 million), lower tax expense ($5 million) and lower non-operating pension expense ($19 million). These benefits were offset by lower sales volumes ($29 million), higher operating costs ($211 million), higher raw material and freight costs ($27 million) and higher mill maintenance outage costs ($22 million). Equity earnings, net of taxes, were flat in the third quarter of 2024 compared with the third quarter of 2023. Net special items in the third quarter of 2024 were a charge of $12 million compared with a charge of $22 million in the third quarter of 2023.
Previous wording
Sales volumes of major products for the three months and six months ended June 30, 2024 and 2023 were as follows:
Current wording
Sales volumes of major products for the three months and nine months ended September 30, 2024 and 2023 were as follows:
Previous wording
Discontinued operations includes the equity earnings of the prior Ilim joint venture. Discontinued operations also includes special items charges of $33 million and $43 million (before and after taxes) for the three months ended June 30, 2023 and March 31, 2023, respectively. The Company completed the sale of the Ilim joint venture in the third quarter of 2023 - this transaction is discussed further in Note 11 - Equity Method Investments of Item 1. Financial Statements.
Current wording
Discontinued operations includes the equity earnings of the prior Ilim joint venture. Discontinued operations also includes special items charges of $59 million ($50 million after taxes) and $33 million (before and after taxes) for the three months ended September 30, 2023 and June 30, 2023, respectively. The Company completed the sale of the Ilim joint venture in the third quarter of 2023 - this transaction is discussed further in Note 11 - Equity Method Investments of the Condensed Notes to the Consolidated Financial Statements.
Previous wording
An income tax benefit of $293 million was recorded for the second quarter of 2024 and the reported effective income tax rate was (142)%. The reported effective income tax rate for the second quarter of 2024 was lower than the first quarter of 2024 due to a tax benefit recorded on our internal legal entity restructuring. Excluding a benefit of $346 million related to the tax effects of net special items and an expense of $2 million related to the tax effects of non-operating pension income, the operational effective income tax rate was 21% for the second quarter of 2024. The operational effective income tax rate for the second quarter of 2024 was lower than the first quarter of 2024 primarily due to an increased tax expense on equity-based compensation during the first quarter and tax benefits recorded during the second quarter for higher U.S. foreign tax credits.
Current wording
An income tax benefit of $71 million was recorded for the third quarter of 2024 and the reported effective income tax rate was (89)%. The negative reported effective income tax rate for the third quarter of 2024 is primarily driven by an additional tax benefit recorded on our internal legal entity restructuring. Excluding a benefit of $102 million related to the tax effects of net special items and an expense of $3 million related to the tax effects of non-operating pension income, the operational effective income tax rate was 15% for the third quarter of 2024. The operational effective income tax rate for the third quarter was lower than the second quarter of 2024 primarily due to tax benefits from lower foreign taxes and additional U.S. federal tax credits that were offset by an increase to U.S. federal income tax reserves.
Previous wording
An income tax provision of $27 million was recorded for the first quarter of 2024 and the reported effective income tax rate was 32%. Excluding a benefit of $4 million related to the tax effects of net special items and expense of $3 million related to the tax effects of non-operating pension income, the operational effective income tax rate was 31% for the first quarter of 2024.
Current wording
An income tax benefit of $293 million was recorded for the second quarter of 2024 and the reported effective income tax rate was (142)%. Excluding a benefit of $346 million related to the tax effects of net special items and expense of $2 million related to the tax effects of non-operating pension income, the operational effective income tax rate was 21% for the second quarter of 2024.
Previous wording
An income tax provision of $33 million was recorded for the second quarter of 2023 and the reported effective income tax rate was 13%. Excluding a benefit of $21 million related to the tax effects of net special items and benefit of $3 million related to the tax effects of non-operating pension expense, the operational effective income tax rate was 22% for the second quarter of 2023.
Current wording
An income tax provision of $39 million was recorded for the third quarter of 2023 and the reported effective income tax rate was 17%. Excluding a benefit of $7 million related to the tax effects of net special items and benefit of $3 million related to the tax effects of non-operating pension expense, the operational effective income tax rate was 18% for the third quarter of 2023.
Previous wording
Industrial Packaging net sales for the second quarter of 2024 were 3% higher compared with the first quarter of 2024 and 1% higher compared with the second quarter of 2023. Business segment operating profit was 35% higher in the second quarter of 2024 compared with the first quarter of 2024 and 4% lower compared with the second quarter of 2023.
Current wording
Industrial Packaging net sales for the third quarter of 2024 were flat compared with the second quarter of 2024 and 4% higher compared with the third quarter of 2023. Business segment operating profit was 32% lower in the third quarter of 2024 compared with the second quarter of 2024 and 39% lower compared with the third quarter of 2023.
Previous wording
(a)Includes intra-segment sales of $25 million, $17 million for the three months ended June 30, 2024 and 2023, respectively; $26 million and $32 million for the three months ended March 31, 2024 and 2023, respectively; and $51 million and $49 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
(a)Includes intra-segment sales of $36 million and $20 million for the three months ended September 30, 2024 and 2023, respectively; $25 million and $17 million for the three months ended June 30, 2024 and 2023, respectively; and $87 million and $69 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
North American Industrial Packaging sales in the second quarter of 2024 were higher compared to the first quarter of 2024 driven by higher average sales prices reflecting prior index movements and the benefits of our Box Go-to-Market strategy, seasonally higher volumes and a favorable geographic mix. Sales also benefited from one additional shipping day in the second quarter of 2024. Total maintenance and economic downtime was about 54,000 short tons higher in the second quarter of 2024 compared with the first quarter of 2024, as lower maintenance downtime was more than offset by higher economic downtime. Operating costs were higher driven by increased costs on goods and services, administrative spend and spending to improve reliability. Planned maintenance downtime costs were lower in the second quarter of 2024 compared with the first quarter of 2024. Input costs were lower, as lower energy and other raw material costs were partially offset by higher recovered fiber.
Current wording
North American Industrial Packaging sales in the third quarter of 2024 were higher compared to the second quarter of 2024 driven by higher average sales prices reflecting prior index movements and the benefits of our box go-to-market strategy, partially offset by seasonally lower volumes and the impact of one less shipping day in the third quarter of 2024. Total maintenance and economic downtime was about 18,000 short tons lower in the third quarter of 2024 compared with the second quarter of 2024, as higher maintenance downtime was more than offset by lower economic downtime. Operating costs were higher driven by reliability incidents and spending, seasonally higher labor, employee benefit costs and weather. Planned maintenance downtime costs were higher in the third quarter of 2024 compared with the second quarter of 2024. Input costs were higher driven by higher energy and wood costs. Business segment operating profit (loss) benefited from the receipt of a $20 million insurance reimbursement in the third quarter of 2024 related to the Ixtac, Mexico fire in the first quarter of 2024.
Previous wording
Compared with the second quarter of 2023, sales in the second quarter of 2024 were higher reflecting the impact of our Box Go-to-Market strategy and lower economic downtime partially offset by an unfavorable geographic mix. Total maintenance and economic downtime was about 436,000 short tons lower in the second quarter of 2024, due to lower economic and maintenance downtime. Economic downtime was favorably impacted by the mill strategic actions taken in the fourth quarter of 2023. Operating costs increased, driven by increased costs on goods and services, administrative spend and spending to improve reliability. Planned maintenance downtime costs were lower in the second quarter of 2024 compared with the second quarter of 2023. Input costs were higher driven by recovered fiber partially offset by lower energy, wood and other raw material costs.
Current wording
Compared with the third quarter of 2023, sales in the third quarter of 2024 were higher reflecting the impact of our box go-to-market strategy and lower economic downtime partially offset by an unfavorable geographic mix. Total maintenance and economic downtime was about 294,000 short tons lower in the third quarter of 2024, primarily due to lower economic downtime. Economic downtime was favorably impacted by the mill strategic actions taken in the fourth quarter of 2023. Operating costs increased, driven by increased costs on goods and services, reliability incidents and spending and employee benefit costs. Planned maintenance downtime costs were higher in the third quarter of 2024 compared with the third quarter of 2023. Input costs were higher driven by recovered fiber partially offset by lower energy, wood and freight costs.
Previous wording
Entering the third quarter of 2024, sales volumes are expected to be seasonally lower compared to the second quarter of 2024. There is one less shipping day in the third quarter of 2024. The lower volumes will be mostly offset by prior index movements and benefits from our Box Go-To-Market strategy. Operating costs are expected to be higher. Planned maintenance downtime costs are expected to be higher in the third quarter of 2024 compared with the second quarter of 2024. Input costs are expected to be higher driven by energy, recovered fiber and chemicals.
Current wording
Entering the fourth quarter of 2024, sales volumes are expected to be lower compared to the third quarter of 2024. There are two less shipping days in the fourth quarter of 2024. The lower volumes are expected to be offset by prior index movements. Operating costs are expected to be lower. Planned maintenance downtime costs are also expected to be lower in the fourth quarter of 2024 compared with the third quarter of 2024. Input costs are expected to be lower driven by recovered fiber and wood costs. The fourth quarter of 2024 is expected to include $15 million of accelerated depreciation associated with the previously announced box plant closures.
Previous wording
EMEA Industrial Packaging sales in the second quarter of 2024 were seasonally lower compared with the first quarter of 2024. Operating costs were higher driven by higher administrative spend and the impact of a warehouse fire in Morocco. Planned maintenance downtime costs were higher in the second quarter of 2024 compared with the first quarter of 2024. Input costs were higher driven by higher fiber costs partially offset by lower energy costs.
Current wording
EMEA Industrial Packaging sales in the third quarter of 2024 were seasonally lower compared with the second quarter of 2024. Operating costs were lower in both the mill and box system. The second quarter of 2024 included the impact of a warehouse fire in Morocco. Planned maintenance downtime costs were lower in the third quarter of 2024 compared with the second quarter of 2024. Input costs were higher driven by higher fiber costs.
Previous wording
Compared with the second quarter of 2023, sales in the second quarter of 2024 were lower reflecting soft demand in the Eurozone partially offset by a favorable product mix. Operating costs were higher, driven by higher administrative spend and the impact of a warehouse fire in Morocco. Planned maintenance downtime costs were higher in the second quarter of 2024 compared with the second quarter of 2023. Input costs were lower, as higher fiber costs were more than offset by lower energy and chemical costs.
Current wording
Compared with the third quarter of 2023, sales in the third quarter of 2024 were higher reflecting increased volumes in Morocco, in addition to a favorable product mix. Operating costs were higher, driven by higher administrative spend. There were no planned maintenance outages in the third quarter of 2024 or the third quarter of 2023. Input costs were higher, driven by higher fiber and energy costs.
Previous wording
Looking ahead to the third quarter of 2024, sales are expected to be stable. Operating costs are expected to be lower. Input costs are expected to be higher, primarily driven by fiber costs. Planned maintenance downtime costs are expected to be lower in the third quarter of 2024.
Current wording
Looking ahead to the fourth quarter of 2024, sales are expected to be seasonally higher. Operating costs are expected to be higher. Input costs are expected to be lower, primarily driven by fiber and energy costs. Planned maintenance downtime costs are expected to be higher in the fourth quarter of 2024.
Previous wording
Global Cellulose Fibers net sales in the second quarter of 2024 were 2% higher compared with the first quarter of 2024 and 3% higher than in the second quarter of 2023. Business Segment operating profit was $78 million higher in the second quarter of 2024 compared with the first quarter of 2024 and was $1 million higher compared with the second quarter of 2023.
Current wording
Global Cellulose Fibers net sales in the third quarter of 2024 were 1% lower compared with the second quarter of 2024 and 2% lower than in the third quarter of 2023. Business Segment operating profit was $9 million higher in the third quarter of 2024 compared with the second quarter of 2024 and was $13 million higher compared with the third quarter of 2023.
Previous wording
Sales were higher driven by higher average sales prices in the second quarter of 2024, compared with the first quarter of 2024. Sales volumes were stable as higher fluff volumes were offset by lower commodity volumes. Total maintenance and economic downtime was about 12,000 short tons lower in the second quarter of 2024 compared with the first quarter of 2024 primarily driven by maintenance downtime. Operating costs were lower, reflecting mill efficiencies from the strategic actions taken in the second half of 2024 and the timing of expenditures. Planned maintenance downtime costs in the second quarter of 2024 were lower compared with the first quarter of 2024. Input costs were stable as lower energy costs were offset by higher chemicals and wood costs.
Current wording
Sales were lower, reflecting lower sales volumes for commodity pulp partially offset by higher sales volumes for fluff pulp and higher average sales prices in the third quarter of 2024 compared with the second quarter of 2024. Total maintenance and economic downtime was about 9,000 short tons lower in the third quarter of 2024 compared with the second quarter of 2024 primarily driven by maintenance downtime. Operating costs were higher, reflecting mill reliability incidents, employee benefit costs and the timing of spending. Planned maintenance downtime costs in the third quarter of 2024 were lower compared with the second quarter of 2024. Input costs were stable as lower energy and chemical costs were offset by higher wood costs.
Previous wording
Compared with the second quarter of 2023, sales in the second quarter of 2024 were higher, reflecting higher fluff volumes partially offset by lower commodity volumes partially offset by lower sales prices. Total maintenance and economic downtime was about 144,000 short tons lower in the second quarter of 2024, due to both economic and maintenance downtime. Economic downtime was favorably impacted by the mill strategic actions taken in the second half of 2024. Operating costs were higher. Planned maintenance downtime costs in the second quarter of 2024 were higher compared with the second quarter of 2023. Input costs were lower primarily for chemicals and wood.
Current wording
Compared with the third quarter of 2023, sales in the third quarter of 2024 were lower, as higher average sales prices and higher fluff volumes were more than offset by lower commodity volumes. Total maintenance and economic downtime was about 136,000 short tons lower in the third quarter of 2024, primarily due to economic downtime. Economic downtime was favorably impacted by the mill strategic actions taken in the second half of 2023. Operating costs were higher, driven by mill reliability incidents and employee benefit costs. Planned maintenance downtime costs in the third quarter of 2024 were lower compared with the third quarter of 2023. Input costs were lower primarily for energy and chemicals.
Previous wording
Entering the third quarter of 2024, sales are expected to be stable. Planned maintenance downtime costs in the third quarter of 2024 are expected to be lower compared with the second quarter of 2024. Operating costs are expected to be higher. Input costs are expected to be stable.
Current wording
Entering the fourth quarter of 2024, sales are expected to be lower. Planned maintenance downtime costs in the fourth quarter of 2024 are expected to be higher compared with the third quarter of 2024. Operating costs are expected to be lower. Input costs are expected to be stable. The fourth quarter of 2024 is expected to include $220 million of accelerated depreciation associated with the previously announced closure of the Georgetown, South Carolina mill.
Previous wording
Cash provided by operations totaled $760 million for the first six months of 2024 compared with $873 million for the comparable 2023 six-month period. Cash provided by working capital components (accounts receivable, contract assets and inventory less accounts payable and accrued liabilities, interest payable and other) totaled $12 million for the six months ended June 30, 2024 compared with cash used by working capital components of $88 million for the six months ended June 30, 2023. The decrease in cash provided by operations in the first six months of 2024 compared to the comparable 2023 six-month period was primarily due to the impact of the timing of mill outage spending and input pricing on accounts payable, partially offset by lower accounts receivable cash receipts due to the timing of sales.
Current wording
Cash provided by operations totaled $1.3 billion for both the first nine months of 2024 and 2023. Cash provided by working capital components (accounts receivable, contract assets and inventory less accounts payable and accrued liabilities, interest payable and other) totaled $216 million for the nine months ended September 30, 2024 compared with cash used by working capital components of $72 million for the nine months ended September 30, 2023. The change in cash provided by operations in the first nine months of 2024 compared to the comparable 2023 nine-month period was primarily due to higher employee incentive compensation accruals and the timing of mill outage spending on accounts payable, partially offset by lower accounts receivable cash receipts due to the timing of sales.
Previous wording
Investments in capital projects totaled $449 million in the first six months of 2024, compared to $608 million in the first six months of 2023. Full-year 2024 capital spending is currently expected to be approximately $800 million to $1.0 billion, or 77% to 96% of depreciation and amortization.
Current wording
Investments in capital projects totaled $661 million in the first nine months of 2024, compared to $836 million in the first nine months of 2023. Full-year 2024 capital spending is currently expected to be approximately $800 million to $1.0 billion, or 62% to 77% of depreciation and amortization.
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Reconciliation of Net earnings (loss) to Adjusted operating earnings (loss)
Current report — wording carried from elsewhere
Compared to the third quarter of 2023, depreciation and amortization in the third quarter of 2024 increased by $9 million or 3%, primarily driven by depreciation recognized on the units of production method at mills with higher production, partially offset by decreased depreciation expense resulting from the fourth quarter 2023 mill strategic actions.
Current report — wording carried from elsewhere
Compared to the third quarter of 2023, interest expense, net in the third quarter of 2024 decreased by $7 million or 12%. The decrease in the third quarter of 2024 compared to the third quarter of 2023 was primarily driven by higher interest income in the third quarter of 2024.
Current report — wording carried from elsewhere
by calendar year were as follows: $109 million in 2024; $191 million in 2025; $144 million in 2026; $333 million in 2027; $672 million in 2028 and $4.1 billion thereafter.
Current report — wording carried from elsewhere
Certain statements in this Quarterly Report on Form 10-Q that are not historical in nature may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements can be identified by the use of forward-looking or conditional words such as “expects,” “anticipates,” “believes,” “estimates,” “could,” “should,” “can,” “forecast,” “intend,” “look,” “may,” “will,” “remain,” “confident,” “commit” and “plan” or similar expressions. These statements are not guarantees of future performance and reflect management’s current views and speak only as to the dates the statements are made and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. All statements, other than statements of historical fact, are forward-looking statements, including, but not limited to, statements regarding anticipated financial results, economic conditions, industry trends, future prospects, and the execution and consummation of corporate transactions or contemplated acquisitions, including our proposed Business Combination with DS Smith Plc. Factors which could cause actual results to differ include but are not limited to: (i) our ability to consummate and achieve the benefits expected from, and other risks associated with, acquisitions, joint ventures, divestitures, spinoffs, capital investments and other corporate transactions, including, but not limited to, our proposed Business Combination with DS Smith Plc and our ability to integrate and implement our plans, forecasts, and other expectations with respect to the combined company; (ii) uncertainty as to whether or when the