INTERNATIONAL PAPER CO NEW
For the period ended Mar 31, 2025. Filed May 7, 2025.
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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.
Mar 31, 2025 · Filed May 7, 2025
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 2024-09-30; filed 2024-11-01.
0000051434-24-000067
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsBusi ness Segment Operating ResultsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000051434-25-000025
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsBusiness 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 118 previous paragraphs and 96 current paragraphs.
32 unchanged; 28 reworded; 36 added; 56 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 10 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 (36)
Current report
International Papers’ first quarter results reflect higher sales and earnings through the successful execution of sale price increases, benefits from transformation initiatives and some favorable non-recurring items. Our results also reflect two months of sales and earnings from the DS Smith acquisition completed on January 31, 2025. As a result of our commercial strategy, we believe we have made progress growing our position in our Packaging Solutions North America business, while executing price increases. We saw a shift in the demand environment during the first quarter of 2025 across the end markets we serve, which we believe is due to increased uncertainty related to potential tariff implications. Industry demand in North America was down in the first quarter of 2025 on a year-over-year basis and we expect that trend to continue into the second quarter of 2025. Demand across the European markets remained soft, but stable. Despite uncertainty in the macroeconomic landscape, we have several initiatives underway and solid momentum that we believe will help drive earnings improvement over the remainder of this year. We are taking actions designed to drive out cost, to increase productivity and efficiencies and to improve our commercial performance.
Current report
Comparing the first quarter of 2025 financial performance to the fourth quarter of 2024, for the legacy International Paper business, sales were relatively flat on seasonally lower volumes. This was offset by slightly higher price and mix in our Packaging Solutions North America business, driven by the flow through of prior price index movements. First quarter of 2025 cost of goods sold was lower on improved operations and costs due to better mill and box plant performance, cost reduction initiatives, along with favorable non-recurring items, which include employee benefit costs, insurance proceeds from the Ixtac, Mexico box plant fire and lower incentive compensation cost. Maintenance outage expense was sequentially flat while input costs were slightly higher due to increased energy costs early in the first quarter of 2025, partially offset by lower fiber costs. First quarter of 2025 results reflect the favorable impact of a lower tax rate versus the prior quarter as a result of favorable discrete items. Accelerated depreciation recognized in the first quarter of 2025 associated with the announced closure of the Campti, Louisiana mill largely offset the non-repeat of accelerated depreciation expense recognized in the fourth quarter of 2024 associated with the Georgetown, South Carolina mill closure and some box plant closures. Finally, first quarter sales and operating earnings reflect two months of DS Smith activity following the January 31, 2025 acquisition. This includes the impact of higher depreciation and amortization resulting from the stepped-up property, plant and equipment and intangible assets associated with the DS Smith purchase accounting.
Current report
The following is a discussion, by segment, of first quarter of 2025 performance versus the fourth quarter of 2024 as well as the second quarter of 2025 outlook. First quarter of 2025 operating profit in our Packaging Solutions North America business was $142 million versus $228 million in the fourth quarter of 2024. This includes an operating loss of $9 million for the DS Smith North America business for the two months following the acquisition. Price and mix was higher from the realization of index movement and open market sales. We expect continued price realization in the second quarter of 2025 due to the prior index movement. Volume was seasonally lower in the first quarter of 2025, but we expect improvements in the second quarter of 2025 as we enter the heavy agriculture season along with anticipated continued progress in growing our position as a result of our commercial strategy. Operations and costs in the first quarter of 2025 was sequentially lower due to our cost out initiatives, along with lower costs associated with employee incentive compensation and favorable medical benefits. We also received $30 million of insurance recoveries related to the 2024 fire at our Ixtac, Mexico facility. Operations and costs are expected to be higher in the second quarter of 2025 as the favorable items from the first quarter of 2025 are not expected to repeat along with additional maintenance costs due to timing. Planned maintenance outage costs were sequentially flat in the first quarter of 2025 but the second quarter is expected to be a heavier maintenance outage quarter. Depreciation and amortization was $208 million higher in the first quarter of 2025 primarily due to the closure of the Campti, Louisiana mill. The second quarter of 2025 will reflect the non-repeat of accelerated depreciation.
Current report
First quarter 2025 operating profit in our Packaging Solutions EMEA business was $46 million versus $19 million in the fourth quarter of 2024. This includes an operating profit of $13 million for the DS Smith EMEA business for the two months following the acquisition. Price and mix was sequentially lower in the first quarter of 2025 due to the impact of price decreases. We expect price and mix to be flat in the second quarter of 2025. Volume was sequentially flat in the first quarter of 2025, and we expect the second quarter of 2025 to remain flat relative to the first quarter of 2025. Operations and costs in the first quarter of 2025 was sequentially lower driven by lower employee incentive compensation and favorable medical benefit costs. Additionally, operations and costs benefited from energy credits on efficiency projects in the business. Operations and costs are expected to be higher in the second quarter of 2025 as these credits are not expected to repeat. Planned maintenance outage costs were slightly lower in the first quarter of 2025 versus the fourth quarter of 2024. The second quarter of 2025 is expected to be marginally higher than the first quarter of 2025.
Current report
First quarter of 2025 operating profit in our Global Cellulose Fibers business was $17 million versus a $250 million operating loss in the fourth quarter of 2024. Price and mix was higher versus the fourth quarter of 2024 on improved fluff mix and the sale of energy credits. We expect price and mix to be higher in the second quarter of 2025 on continued price realization from prior index movement. Volume was sequentially flat in the first quarter of 2025, and we expect the second quarter of 2025 to remain flat relative to the first quarter of 2025. Operations and costs were sequentially lower in the first quarter of 2025 due to improved mill performance and lower costs associated with employee incentive compensation. We expect second quarter of 2025 operations and costs to be flat compared to the first quarter of 2025. Planned maintenance outage costs were sequentially higher in the first quarter of 2025. Second quarter of 2025 is expected to be higher as one maintenance outage was moved to the second quarter which will drive higher costs relative to the first quarter of 2025. Finally, first quarter of 2025 depreciation and amortization was lower on the non-repeat of accelerated depreciation expense associated with the Georgetown, South Carolina mill closure in the fourth quarter of 2024.
Current report
Acquisition of DS Smith
Current report
On January 31, 2025, the Company completed its acquisition of the entire issued and to be issued share capital of DS Smith. Upon closing, IP issued 0.1285 shares for each DS Smith share, resulting in the issuance of 178,126,631 new shares of IP common stock (“New Company Common Stock”). As a result of the share issuance, the holders of the New Company Common Stock owned approximately 34.1% of the Company’s outstanding share capital upon closing. Based on the issuance of 178,126,631 new shares and the closing price of $55.63 on the close of January 31, 2025, the total purchase consideration for the completed acquisition was approximately $9.9 billion.
Current report
On February 4, 2025, the shares of New Company Common Stock began trading on the New York Stock Exchange under the symbol “IP” and the shares of Company Common Stock, including the shares of New Company Common Stock, began trading on the London Stock Exchange via a secondary listing under the symbol “IPC.” The headquarters of the combined company is based in Memphis, Tennessee, and the EMEA headquarters has been established at DS Smith’s existing main office in London.
Current report
Divestiture of European Corrugated Box Plants
Current report
On April 14, 2025, the Company announced it entered into exclusive negotiations with Palm Group of Germany after receiving an irrevocable offer for the purchase of five plants in Europe: (i) three plants in Normandy, France (namely, one box plant in Saint-Amand, one box plant in Mortagne, and one sheet plant in Cabourg); (ii) one box plant in Ovar, Portugal; and (iii) one box plant in Bilbao, Spain. Upon completion of the required French works council consultation and/or employee information processes, the parties expect to enter into a definitive share purchase agreement. The closing is expected by the end of the second quarter of 2025. All assets and liabilities at March 31, 2025 related to these locations have been recorded as held for sale in the accompanying condensed consolidated balance sheet.
Current report
The sale of these plants was agreed to with the European Commission as a remedy for IP’s acquisition of DS Smith, as published on the European Commission’s website on January 24, 2025. The conclusion of the divestment is subject to the European Commission’s approval of the proposed purchaser.
Current report
Cash provided by (used for) operations totaled $(288) million and $395 million for the first three months of 2025 and 2024, respectively. Free cash flow in the first three months of 2025 and 2024 was $(618) million and $144 million, respectively. Cash used for operations during the first quarter of 2025 primarily reflects the timing of our annual incentive compensation payout and the payment of transaction costs associated with the closing of the DS Smith acquisition and other transformation related costs for a total impact of approximately $670 million. Additionally, first quarter of 2025 free cash flow reflects increased capital spending in line with our capital spending plan for 2025. The Company generated meaningful cash receipts outside of free cash flow through the sale of certain assets along with the receipt of insurance recoveries related to the Ixtac, Mexico box plant fire.
Current report
The increase in the first quarter of 2025 compared to the fourth quarter of 2024 and the first quarter of 2024 was primarily driven by the addition of the newly acquired DS Smith business as a result of the completed acquisition in the first quarter of 2025. Additional details on net sales are provided in the Business Segment Operating Results section below.
Current report
Net special items charges of $70 million, $15 million and $35 million in the first quarter of 2025 and 2024 and the fourth quarter of 2024, respectively, are included in cost of products sold. The first quarter of 2025 includes $1.09 billion for DS Smith (including $70 million of special items charges). Compared to the fourth quarter of 2024, there were decreases of $93 million in raw materials, offset by increases of $54 million in fuel expense. Compared to the first quarter of 2024, cost of products sold was impacted by $320 million for decreases in raw materials and increases in insurance recoveries and one-time energy credits received, offset by lower maintenance and fuel expenses of $86 million.
Current report
Depreciation expense includes $197 million, $5 million and $233 million for the first quarter of 2025 and 2024 and the fourth quarter of 2024, respectively, for accelerated depreciation related to mill and other 80/20 strategic actions. The first quarter of 2025 includes $107 million for DS Smith.
Current report
The first quarter of 2025 includes $140 million for DS Smith. Compared to the fourth quarter of 2024 and the first quarter of 2024, there were decreases in freight expense of $4 million and $43 million, respectively.
Current report
Net special items charges of $50 million in the first quarter of 2025 are included in taxes other than payroll and income taxes. The first quarter of 2025 includes $5 million for DS Smith.
Current report
Net special items includes income of $10 million in interest expense, net for the first quarter of 2024. The first quarter of 2025 includes $24 million for DS Smith.
Current report
An income tax benefit of $31 million was recorded for the first quarter of 2025 and the reported effective income tax rate was 23%. Excluding a benefit of $45 million related to the tax effects of net special items and a benefit of $1 million related to the tax effects of non-operating pension expense, the operational effective income tax rate was 13% for the first quarter of 2025.
Current report
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. The operational and reported effective income tax rates were lower in the first quarter of 2025 than in the first quarter of 2024 primarily due to a tax benefit for equity-based compensation in the first quarter of 2025 and a tax expense for equity-based compensation in the first quarter of 2024.
Current report
The Company currently operates in three segments: Packaging Solutions North America, Packaging Solutions EMEA and Global Cellulose Fibers.
Current report
Packaging Solutions EMEA results include sales of $1.2 billion and business segment operating profit of $13 million for the DS Smith business in the first quarter of 2025. For legacy IP Packaging Solutions EMEA, sales were lower driven by lower sales prices reflecting prior price decreases compared with the fourth quarter of 2024. Cost of products sold decreased by $21 million and was impacted by a $13 million one-time energy subsidy received in the first quarter of 2025. Input costs were higher driven by energy costs. Planned maintenance downtime costs were lower in the first quarter of 2025 compared with the fourth quarter of 2024. Selling and administrative expenses decreased by $23 million driven by lower employee incentive compensation and medical benefit expenses.
Current report
Compared with the first quarter of 2024, legacy IP Packaging Solutions EMEA sales in the first quarter of 2025 were lower driven by lower sales volumes. Cost of products sold decreased by $28 million and was impacted by a one time energy credit received in the first quarter of 2025. Input costs were higher driven by higher energy costs and woods costs. Selling and administrative expenses were flat compared to the first quarter of 2024.
Current report
Global Cellulose Fibers sales were lower, reflecting lower sales prices from prior index movements and lower sales volumes driven by the mill strategic actions taken in the fourth quarter of 2024, partially offset by a favorable product mix. Cost of products sold decreased by $25 million and was impacted by improved mill reliability and lower economic downtime. Planned maintenance downtime costs in the first quarter of 2025 were higher compared with the fourth quarter of 2024. Input costs were higher as higher energy costs were partially offset by lower chemical and wood costs. Selling and administrative expenses decreased $31 million driven by lower employee incentive compensation and medical benefit expenses. Depreciation and amortization expense was $228 million lower as the fourth quarter of 2024 included $215 million of accelerated depreciation related to the closure of the Georgetown, South Carolina mill.
Current report
Cash provided by (used for) operations totaled $(288) million and $395 million for the first three months of 2025 and 2024, respectively. Cash provided by (used for) working capital components (accounts receivable, contract assets and inventory less accounts payable and accrued liabilities, interest payable and other) totaled $(622) million for the three months ended March 31, 2025 compared with cash provided by (used for) working capital components of $32 million for the three months ended March 31, 2024. The first quarter of 2025 cash used for operations includes certain significant payments that, in total, impacted operating cash flow by $670 million. This includes approximately $80 million of severance payments and approximately $240 million of DS Smith related transaction costs. This amount also includes the cash impact from the 2024 incentive compensation and other benefit payments made in the first quarter of 2025.
Current report
Cash provided by (used for) investment activities totaled $237 million in the first three months of 2025 compared with $(247) million in the first three months of 2024. The increase in cash provided by investment activities is mainly due to proceeds from the sale of fixed assets of $83 million, proceeds from insurance recoveries of $28 million and net cash acquired from acquisitions of $415 million, offset by higher capital expenditures of $79 million.
Current report
During the first quarter of 2025, the Company borrowed $175 million under its commercial paper program and $64 million under its committed bank facility.
Current report
On February 14, 2025, DS Smith, a wholly owned subsidiary of International Paper, announced separate invitations (each such invitation, a “Consent Solicitation”) to eligible holders of its outstanding (i) €600 million 0.875 percent Notes due September 12, 2026 (the “2026 Notes”); (ii) €850 million 4.375 percent Notes due July 27, 2027 (the “2027 Notes”); (iii) £250 million 2.875 percent Notes due July 26, 2029 (the “2029 Notes”); and (iv) €650 million 4.500 percent Notes due July 27, 2030 (the “2030 Notes”), in each case issued by DS Smith under its Euro-Medium Term Note Programme (each a “Series” and, together, the “Notes”) to consent to, amongst other things, certain modifications to the terms and conditions (the “Conditions”) of, and the trust deed (the “Trust Deed”) for, the relevant Series to provide for (i) the removal of the obligation for DS Smith to prepare audited and unaudited consolidated accounts; (ii) the amendment of certain events of default to align more closely with certain equivalent provisions included in the documentation relating to debt securities issued by International Paper and to allow additional flexibility for potential reorganization of DS Smith’s subsidiaries, if required, now that DS Smith and its subsidiaries are part of the International Paper group; and (iii) certain consequential modifications to the applicable Conditions and Trust Deed for the relevant Series in relation to items (i) and (ii) above (together, the “Proposed Amendments”). As consideration for the holders of the Notes consenting to the Proposed Amendments, it was proposed that DS Smith procure a guarantee from International Paper, to guarantee the payment obligations of DS Smith under the Notes. The full principal amount of each Series of Notes issued by DS Smith remains outstanding as of the date hereof. On March 10, 2025, DS Smith has executed and delivered a Supplemental Trust Deed in respect of each Series to implement the Proposed Amendments, and International Paper has executed and delivered a deed of guarantee in respect of each Series to guarantee the payment obligations of DS Smith under such Series.
Current report
In March 2025, the Company amended and restated its £1.25 billion credit facility agreement to, among other things (i) replace its obligation to prepare audited and unaudited consolidated accounts and instead provide International Paper’s account information, on the same terms as International Paper’s existing credit facilities, (ii) amend the financial covenant in the credit facility agreement to align with financial covenants given by International Paper in its existing credit facilities, (iii) amend certain events of default, and undertakings to align more closely with certain equivalent provisions included in the documentation relating to the existing financings of International Paper and to allow additional flexibility for potential reorganization of DS Smith’s subsidiaries, if required, now that DS Smith and its subsidiaries are part of the International Paper group. The multi-currency credit facility allows for GBP, EUR and USD borrowings and provides for interest rates at a floating rate index plus a pre-determined margin. Credit facility borrowings are denominated in the currency that aligns with the Company's cashflows. At March 31, 2025, the Company had €840 million (approximately $909 million at the current exchange rate) borrowings outstanding under the credit facility. The Company’s credit facility agreement is not subject to any restrictive covenants other than that International Paper must comply with the same negative covenants as per its existing credit facilities. IP was in compliance with all its debt covenants at March 31, 2025, and was well below the thresholds stipulated under the covenants as defined in the credit facility agreement. Further the financial covenants do not restrict any borrowings under the credit facility agreement.
Current report
In April 2025, the Company amended and restated its credit facility agreement to, among other things (i) replace its obligation to prepare audited and unaudited consolidated accounts and instead provide International Paper’s account information, on the same terms as International Paper’s existing credit facilities, (ii) amend the financial covenant in the credit facility agreement to align with financial covenants given by International Paper in its existing credit facilities, (iii) amend certain events of default, and undertakings to align more closely with certain equivalent provisions included in the documentation relating to the existing financings of International Paper and to allow additional flexibility for potential reorganization of DS Smith’s subsidiaries, if required, now that DS Smith and its subsidiaries are part of the International Paper group. The credit facility agreement provides for interest rates at a fixed rate for each facility. At March 31, 2025, the Company had €200 million borrowings outstanding under the €200 million credit facility agreement. The Company’s credit facility agreement is not subject to any restrictive covenants other than that International Paper must comply with the same negative covenants as per its existing credit facilities. IP was in compliance with all its debt covenants at March 31, 2025, and was well below the thresholds stipulated under the covenants as defined in the credit facility agreement. Further the financial covenants do not restrict any borrowings under the credit facility agreement.
Current report
The Company also has a €60 million committed bank facility that matures in December 2026. In April 2025, the Company amended and restated its credit facility agreement to, among other things (i) replace its obligation to prepare audited and unaudited consolidated accounts and instead provide International Paper’s account information, on the same terms as International Paper’s existing credit facilities, (ii) amend the financial covenant in the credit facility agreement to align with financial covenants given by International Paper in its existing credit facilities, (iii) amend certain events of default, and undertakings to align more closely with certain equivalent provisions included in the documentation relating to the existing financings of International Paper and to allow additional flexibility for potential reorganization of DS Smith’s subsidiaries, if required, now that DS Smith and its subsidiaries are part of the International Paper group. The multi-currency credit facility allows for GBP, EUR and USD borrowings. At March 31, 2025, there were no borrowings outstanding under this agreement. The Company has a £50 million uncommitted bank facility. At March 31, 2025 the Company had $63 million borrowings outstanding under this agreement.
Current report
The Company’s acquisitions of businesses are accounted for in accordance with ASC 805, "Business Combinations". We allocate the total purchase price of the assets acquired and liabilities assumed based on their estimated fair value as of the business combination date. In developing estimates of fair values for long-lived assets, including identifiable intangible assets, the Company utilizes a variety of inputs including forecasted cashflows, anticipated growth rates, discount rates, appraisals, market valuations, estimated replacement costs and depreciation, and obsolescence factors. Determining the fair value for specifically identified intangible assets such as customer lists and developed technology involves judgment. We may refine our estimates and make adjustments to the assets acquired and liabilities assumed over a measurement period, not to exceed one year. Upon the conclusion of the measurement period or the final determination of the values of assets acquired and liabilities assumed, whichever comes first, any subsequent adjustments are charged to the consolidated statements of earnings. Subsequent actual results of the underlying business activity supporting the goodwill and specifically identified intangible assets could change, requiring us to record impairment charges or adjust their economic lives in future periods.
Removed paragraphs (56)
Previous 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.
Previous report
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 report
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 report
Restructuring Actions
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
Contemplated Acquisition of DS Smith
Previous report
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 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.
Previous 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.
Previous 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.
Previous report
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 report
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 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.
Previous report
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 report
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 report
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.
Previous report
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 report
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 report
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 report
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 report
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 report
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.
Previous report
Refer to Income Taxes section on page 33 for discussion on income tax provision (benefit) and income tax rates.
Previous report
Earnings (loss) from continuing operations
Previous report
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 report
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 report
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 report
Sales Volumes by Product (a)
Previous report
Sales volumes of major products for the three months and nine months ended September 30, 2024 and 2023 were as follows:
Previous report
(a)Sales volumes include third party and intersegment sales and exclude sales of equity investees.
Previous report
(b)Volumes for corrugated box sales reflect consumed tons sold ("CTS"). Board sales for these businesses reflect invoiced tons.
Previous report
(c)Includes North American volumes and internal sales to mills.
Previous report
Discontinued Operations
Previous report
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.
Showing the first 40 of 56 passages. Open the source sections for the rest.
Reworded paragraphs (28)
Previous 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.
Current wording
Net earnings (loss) were $(105) million ($(0.24) per diluted share) in the first quarter of 2025, compared with $(147) million ($(0.42) per diluted share) in the fourth quarter of 2024 and $56 million ($0.16 per diluted share) in the first quarter of 2024. The Company generated Adjusted operating earnings (a non-GAAP measure defined below) of $101 million ($0.23 per diluted share) in the first quarter of 2025, compared with $(7) million ($(0.02) per diluted share) in the fourth quarter of 2024 and $61 million ($0.17 per diluted share) in the first quarter of 2024.
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 directly 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 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 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. 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 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.
Current wording
(a) For the three months ended March 31, 2025, this amount includes a tax benefit of $1 million on the non-operating pension expense and a tax benefit of $45 million associated with special items. 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. The three months ended December 31, 2024 includes tax expense of $2 million on the non-operating pension income and a tax benefit of $36 million associated with special items.
Previous 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.
Current wording
Free cash flow is a non-GAAP measure, which equals cash provided by operations less capital expenditures, 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 third quarter of 2024 compared with the second quarter of 2024 and the third quarter of 2023:
Current wording
The following summarizes our results of operations for first quarter of 2025 compared with the fourth quarter of 2024 and the first quarter of 2024:
Previous 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.
Current wording
Net special items charges of $113 million, $5 million and $43 million in the first quarter of 2025 and 2024 and the fourth quarter of 2024, respectively, are included in selling and administrative expenses. The first quarter of 2025 includes $123 million for DS Smith (including $49 million of special items charges). Compared to the fourth quarter of 2024, there were decreases in incentive compensation and medical benefit costs. Compared to the first quarter of 2024, there were decreases in medical benefit costs offset by incentive compensation and other costs.
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)%. 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.
Current wording
An income tax benefit of $78 million was recorded for the fourth quarter of 2024 and the reported effective income tax rate was 35%. Excluding a benefit of $36 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 88% for the fourth quarter of 2024. The operational and reported effective income tax rates were lower in the first quarter of 2025 than in the fourth quarter of 2024 primarily due to the timing and magnitude of the accelerated depreciation expense recorded in the fourth quarter of 2024 associated with the closure of the Georgetown, South Carolina mill.
Previous wording
The following is a reconciliation of the net income tax provision (benefit) to the operational income tax provision and the reported effective income tax rate to the operational effective income tax rate:
Current wording
The following is a reconciliation of the net income tax provision (benefit) to the operational income tax provision (a non-GAAP financial measure) and the reported effective income tax rate to the operational effective income tax rate (a non-GAAP financial measure):
Previous wording
The operational income tax provision and operational effective income tax rate are non-GAAP financial measures and are calculated by adjusting the income tax provision from continuing operations and rate to exclude the tax effect of net special items and non-operating pension expense (income). The most directly comparable GAAP measure is the reported income tax provision and effective income tax rate. Management believes that this presentation provides useful information to investors by providing a meaningful comparison of the income tax rate between past and present periods.
Current wording
The operational income tax provision and operational effective income tax rate are non-GAAP financial measures and are calculated by adjusting the income tax provision from continuing operations and rate to exclude the tax effect of net special items and non-operating pension expense (income). The most directly comparable GAAP measures are the reported income tax provision and effective income tax rate, respectively. Management believes that this presentation provides useful information to investors by providing a meaningful comparison of the income tax rate between past and present periods.
Previous 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.
Current wording
Packaging Solutions North America results include sales of $127 million and business segment operating profit (loss) of $(9) million for the DS Smith business in the first quarter of 2025. For legacy IP Packaging Solutions North America, sales were higher compared to the fourth 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. Cost of products sold increased by $7 million and was impacted by higher costs on goods and services. Planned maintenance downtime costs were lower in the first quarter of 2025 compared with the fourth quarter of 2024. Input costs were higher driven by higher energy costs. Selling and administrative expenses decreased by $97 million driven by lower employee incentive compensation and medical benefit expenses. Depreciation and amortization expense increased by $193 million driven by accelerated depreciation recorded in the first quarter of 2025 related to the announced closure of the Red River containerboard mill in Campti, LA. Business segment operating profit benefited from the receipt of a $30 million insurance reimbursement in the first quarter of 2025 and $13 million in the fourth quarter of 2024 related to the Ixtac, Mexico box plant fire in the first quarter of 2024.
Previous 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.
Current wording
Compared with the first quarter of 2024, IP legacy Packaging Solutions North America sales in the first quarter of 2025 were higher driven by higher sales prices, partially offset by lower sales volumes reflecting the impact of our box go-to-market strategy. Cost of products sold decreased by $23 million and was impacted by lower sales volumes. Operating costs increased, driven by increased costs on goods and services, reliability incidents and maintenance spending. Planned maintenance downtime costs were higher in the first quarter of 2025 compared with the first quarter of 2024. Input costs were higher driven by energy costs. Selling and administrative expenses decreased $6 million and was impacted by lower employee medical benefit expenses. Depreciation and amortization expense increased $194 million driven by the accelerated deprecation related to the Red River mill closure. Distribution expense decreased by $35 million and was impacted by lower sales volumes. The first quarter of 2025 benefited from the receipt of the $30 million insurance reimbursement related to the Ixtac, Mexico box plant fire.
Previous 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.
Current wording
Entering the second quarter of 2025, sales volumes are expected to be seasonally higher compared to the first quarter of 2025. Sales are also expected to be impacted by prior index movements. Operating costs are expected to be higher. Planned maintenance downtime costs are expected to be higher in the second quarter of 2025 compared with the first quarter of 2025. Input costs are expected to be lower driven by energy and fiber costs. The second quarter of 2025 will include one additional month of DS Smith sales and business segment operating profit compared to the first quarter of 2025.
Previous 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.
Current wording
Looking ahead to the second quarter of 2025, sales are expected to be higher, reflecting one additional month of DS Smith sales partially offset by seasonally lower volumes. Operating costs are expected to be higher. Input costs are expected to be lower, driven by energy costs. Planned maintenance downtime costs are expected to be higher in the second quarter of 2025. The second quarter of 2025 will include one additional month of DS Smith business segment operating profit compared to the first quarter of 2025.
Previous 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.
Current wording
Compared with the first quarter of 2024, sales in the first quarter of 2025 were lower, as higher average sales prices and an improved product mix were more than offset by lower commodity volumes driven by the mill strategic actions taken in the fourth quarter of 2024. Cost of products sold decreased $90 million and was impacted by lower sales volumes and lower planned maintenance downtime costs partially offset by higher input costs, primarily for energy costs. Selling and administrative expense was $15 million lower and was impacted by lower employee medical costs. Distribution costs were $15 million lower reflecting lower sales volumes.
Previous 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.
Current wording
Entering the second quarter of 2025, sales volumes are expected to be stable. Planned maintenance downtime costs in the second quarter of 2025 are expected to be higher compared with the first quarter of 2025. Operating costs are expected to be stable. Input costs are expected to be lower driven by energy costs.
Previous 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.
Current wording
Capital expenditures totaled $330 million in the first three months of 2025, compared to $251 million in the first three months of 2024. Full-year 2025 capital expenditures are currently expected to be approximately $1.8 billion to $1.9 billion, or 100% to 106% of depreciation and amortization.
Previous wording
Financing activities for the first nine months of 2024 included a $33 million net decrease in debt versus an $83 million net increase in debt during the comparable 2023 nine-month period.
Current wording
Financing activities for the first three months of 2025 included a $233 million net increase in debt versus a $3 million net decrease in debt during the comparable 2024 three-month period.
Previous wording
See Note 16 - Debt of the Condensed Notes to the Consolidated Financial Statements for a discussion of various debt-related actions taken by the Company during the nine months ended September 30, 2024.
Current wording
See Note 15 - Debt of the Condensed Notes to the Consolidated Financial Statements for a discussion of various debt-related actions taken by the Company during the three months ended March 31, 2025.
Previous wording
There were no early debt reductions for the three months or nine months ended September 30, 2024 and 2023, respectively.
Current wording
There were no early debt reductions for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
At September 30, 2024, International Paper’s credit agreements totaled $1.9 billion, which is comprised of the $1.4 billion contractually committed bank credit agreement and up to $500 million under the receivables securitization program. In June 2023, the Company amended and restated its credit agreement to, among other things (i) reduce the size of the contractually committed bank facility from $1.5 billion to $1.4 billion, (ii) extend the maturity date from June 2026 to June 2028, and (iii) replace the LIBOR-based rate with a SOFR-based rate. Management believes that the Company's credit agreements are adequate to cover expected operating cash flow variability during the current economic cycle. The credit agreements generally provide for interest rates at a floating rate index plus a pre-determined margin dependent upon International Paper’s credit rating. At September 30, 2024, the Company had no borrowings outstanding under the $1.4 billion credit agreement or the $500 million receivables securitization program. The Company’s credit agreements are not subject to any restrictive covenants other than the financial covenants as disclosed in Note 16 - Debt, and the borrowings under the receivables securitization program being limited by eligible receivables. The Company was in compliance with all its debt covenants at September 30, 2024, and was well below the thresholds stipulated under the covenants as defined in the credit agreements. The financial covenants do not restrict any borrowings under the credit agreements.
Current wording
At March 31, 2025, International Paper’s USD denominated credit facilities totaled $1.9 billion, which is comprised of the $1.4 billion contractually committed bank credit agreement and up to $500 million under the receivables securitization program. Management believes that the Company's credit agreements are adequate to cover expected operating cash flow variability during the current economic cycle. The credit agreements generally provide for interest rates at a floating rate index plus a pre-determined margin dependent upon International Paper’s credit rating. At March 31, 2025, the Company had no borrowings outstanding under the $1.4 billion credit agreement or the $500 million receivables securitization program. The Company’s credit agreements are not subject to any restrictive covenants other than the financial covenants as disclosed in Note 15 - Debt, and the borrowings under the receivables securitization program being limited by eligible receivables. The Company was in compliance with all its debt covenants at March 31, 2025, and was well below the thresholds stipulated under the covenants as defined in the credit agreements. The financial covenants do not restrict any borrowings under the credit agreements.
Previous wording
In addition to the $1.4 billion capacity under the Company's credit agreements, International Paper has a commercial paper program with a borrowing capacity of $1.0 billion supported by its $1.4 billion credit agreement. Under the terms of the program, individual maturities on borrowings may vary, but not exceed one year from the date of issue. Interest bearing notes may be issued either as fixed or floating rate notes. As of September 30, 2024, the Company had no outstanding borrowings under the commercial paper program.
Current wording
In addition to the $1.4 billion capacity under the Company's credit agreements, International Paper has a commercial paper program with a borrowing capacity of $1.0 billion supported by its $1.4 billion credit agreement. Under the terms of the program, individual maturities on borrowings may vary, but not exceed one year from the date of issue. Interest bearing notes may be issued either as fixed or floating rate notes. As of March 31, 2025, the Company had $175 million of borrowings outstanding under the commercial paper program.
Previous wording
During the first nine months of 2024, International Paper used 2.0 million shares of treasury stock for various incentive plans. International Paper also acquired 0.6 million shares of treasury stock, including restricted stock tax withholdings during the first three months of 2024. Repurchases of common stock and payments of restricted stock withholding taxes totaled $22 million during this period. Our current share repurchase program approved by our Board of Directors ("Board") on October 11, 2022, which does not have an expiration date, has approximately $2.96 billion aggregate amount of shares of common stock remaining authorized for purchase as of September 30, 2024. During the three months ended September 30, 2024, no shares of common stock were repurchased under our share repurchase program.
Current wording
During the first three months of 2025, International Paper used 3.4 million shares of treasury stock for various incentive plans. International Paper also acquired 1.1 million shares of treasury stock, related to restricted stock tax withholdings during the first three months of 2024. Payments of restricted stock withholding taxes totaled $62 million during this period. Our current share repurchase program approved by our Board of Directors ("Board") on October 11, 2022, which does not have an expiration date, has approximately $2.96 billion aggregate amount of shares of common stock remaining authorized for purchase as of March 31, 2025. During the three months ended March 31, 2025, no shares of common stock were repurchased under our share repurchase program.
Previous wording
During the first nine months of 2023, International Paper used approximately 1.6 million shares of treasury stock for various incentive plans. International Paper also acquired 5.9 million shares of treasury stock, including restricted stock tax withholding during the first three months of 2023. Repurchases of common stock and payments of restricted stock withholding taxes totaled $218 million, including $197 million related to shares repurchased under the Company's repurchase program during this period.
Current wording
During the first three months of 2024, International Paper used approximately 1.9 million shares of treasury stock for various incentive plans. International Paper also acquired 0.6 million shares of treasury stock, related to restricted stock tax withholding during the first three months of 2024. Payments of restricted stock withholding taxes totaled $22 million. During the three months ended March 31, 2024, no shares of common stock were repurchased under our share repurchase program.
Previous wording
Cash dividend payments related to common stock totaled $482 million and $482 million for the first nine months of 2024 and 2023, respectively. Dividends were $1.3875 per share for the first nine months of 2024 and 2023.
Current wording
Cash dividend payments related to common stock totaled $244 million and $161 million for the first three months of 2025 and 2024, respectively. Dividends were $0.4625 per share for the first three months of 2025 and 2024.
Previous wording
Our pension plan is currently fully funded and we do not anticipate any required cash contributions for the next 12 months.
Current wording
Our U.S. and U.K. pension plans are currently fully funded and we do not anticipate any required cash contributions for the next 12 months.
Previous wording
Information concerning variable interest entities is set forth in Note 15 in the Company's Annual Report. In connection with the 2006 International Paper installment sale of forestlands, we received $4.8 billion of installment notes. These installment notes were used by variable interest entities as collateral for borrowings from third-party lenders. These variable interest entities were restructured in 2015 when the installment notes and third-party loans were extended. The restructured variable interest entities held installment notes of $4.8 billion and third-party loans of $4.2 billion which both matured in August 2021. We settled the third-party loans at their maturity with the proceeds from the installment notes. This resulted in cash proceeds of approximately $630 million representing our equity in the variable interest entities. Maturity of the installment notes and termination of the monetization structure also resulted in a $72 million tax liability that was paid in the fourth quarter of 2021. On September 2, 2022, the Company and the Internal Revenue Service agreed to settle the previously disclosed timber monetization restructuring tax matter involving the 2015 Financing Entities. Under this agreement, the Company agreed to fully resolve the matter and pay $252 million in U.S. federal income taxes. As a result, interest was charged upon closing of the audit. The Company has paid $252 million in U.S. federal income taxes and $58 million in interest expense as a result of the settlement agreement. Of this amount, the Company paid $163 million in U.S. federal income taxes and $30 million in interest during the first quarter of 2023, with the Company fully satisfying the remaining payment terms of the settlement agreement regarding the 2015 Financing Entities timber monetization restructuring tax matter during the second quarter of 2023.
Current wording
Information concerning variable interest entities is set forth in Note 14 in the Company's Annual Report.
Previous wording
The Company has included in its Annual Report a discussion of these critical accounting policies, which are important to the portrayal of the Company’s financial condition and results of operations and may require management’s judgments. The Company has not made any changes in these critical accounting policies during the first nine months of 2024.
Current wording
The Company has included in its Annual Report a discussion of these critical accounting policies, which are important to the portrayal of the Company’s financial condition and results of operations and may require management’s judgments. Except as described below, the Company has not made any changes in these critical accounting policies during the first three months of 2025.
Previous wording
Business Combination may be completed, if at all (iii) risks with respect to climate change and global, regional, and local weather conditions, as well as risks related to our targets and goals with respect to climate change and the emission of greenhouse gases and other environmental, social and governance matters, including our ability to meet such targets and goals; (iv) loss contingencies and pending, threatened or future litigation, including with respect to environmental related matters; (v) the level of our indebtedness, risks associated with our variable rate debt, and changes in interest rates (including the impact of current elevated interest rate levels and the potential for ongoing reductions in interest rates); (vi) the impact of global and domestic economic conditions and industry conditions, including with respect to current negative macroeconomic conditions, inflationary pressures and changes in the cost or availability of raw materials, energy sources and transportation sources, supply chain shortages and disruptions, competition we face, cyclicality and changes in consumer preferences, demand and pricing for our products, and conditions impacting the credit, capital and financial markets; (vii) risks arising from conducting business internationally, domestic and global geopolitical conditions, military conflict (including the Russia/Ukraine conflict, the conflict in the Middle East, the further expansion of such conflicts, and the geopolitical and economic consequences associated therewith), changes in currency exchange rates, trade protectionist policies and trade tensions, downgrades in our credit ratings, and/or the credit ratings of banks issuing certain letters of credit, issued by recognized credit rating organizations; (viii) the amount of our future pension funding obligations, and pension and healthcare costs; (ix) the costs of compliance, or the failure to comply with, existing and new environmental (including with respect to climate change and greenhouse gas emissions), tax, labor and employment, privacy, anti- bribery and anti-corruption, and other U.S. and non-U.S. governmental laws and regulations (including but not limited to those in the United Kingdom and European Union); (x) any material disruption at any of our manufacturing facilities or other adverse impact on our operations due to severe weather, natural disasters, climate change or other causes; (xi) our ability to realize expected benefits and cost savings associated with restructuring initiatives; (xii) cybersecurity and information technology risks, including as a result of security breaches and cybersecurity incidents; (xiii) our exposure to claims under our agreements with Sylvamo Corporation; (xiv) our failure to realize the anticipated benefits of the spin-off of Sylvamo Corporation and the qualification of such spin-off as a tax-free transaction for U.S. federal income tax purposes; (xv) risks associated with our review of strategic options for our…
Excerpt shortened here; the source contains the full paragraph.
Current wording
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,” “outlook,” “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 anticipated benefits, execution and consummation of corporate transactions or contemplated acquisitions, including our completed business combination with DS Smith Limited. 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 business combination with DS Smith; (ii) our ability to integrate and implement our plans, forecasts, and other expectations with respect to the combined company, including in light of our increased scale and global presence; (iii) risks associated with our planned divestiture of five wholly-owned European subsidiaries required as a condition precedent to closing the DS Smith acquisition including achievement of negotiations, closing conditions and regulatory approvals; (iv) our failure to comply with the obligations associated with being a public company listed on the New York Stock Exchange and the London Stock Exchange and the costs associated therewith; (v) risks with respect to climate change and global, regional, and local weather conditions, as well as risks related to our targets and goals with respect to climate change and the emission of greenhouse gases and other environmental, social and governance matters, including our ability to meet such targets and goals; (vi) loss contingencies and pending, threatened or future litigation, including with respect to environmental related matters; (vii) the level of our indebtedness, including our obligations related to becoming the guarantor of the Euro Medium Term Notes as a result of our acquisition of DS Smith, risks associated with our variable rate debt, and changes in interest rates (including the impact of current elevated interest rate levels); (vii…
Excerpt shortened here; the source contains the full paragraph.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Review of Strategic Options for Global Cellulose Fibers Business
Previous report — wording carried 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