IP Financial Analysis

Analysis Date: 1/31/2025

Business Model

International Paper generates revenue primarily through Industrial Packaging (83%) and Global Cellulose Fibers (15%)

Revenue Sources

• Industrial Packaging - Corrugated packaging, containerboard, and recycling (83% of revenue)
• Global Cellulose Fibers - Pulp products (15% of revenue)

Revenue Distribution by Channel

• North America Industrial Packaging: $15.5B (83% of revenue)
• EMEA Packaging: $1.3B (7% of revenue)

Income Statement Analysis

• Revenue declined slightly (-0.5%) YoY to $4.58B due to lower volumes from commercial contract restructuring
• Operating earnings improved to $6M from -$154M on higher pricing and cost improvements
• Net loss of $147M includes $395M in charges for accelerated depreciation and restructuring

Balance Sheet Analysis

• Solid balance sheet with $1.17B cash and $3B total liquidity
• Debt/EBITDA ratio at 2.7x (Moody's basis)
• Qualified pension plan fully funded

Cash Flow Analysis

• Operating cash flow of $397M in Q4, down 19.3% YoY
• Full year free cash flow improved to $757M from $692M in 2023

Capital Allocation

Focus on maintaining strong balance sheet while investing in cost reduction and growth. 2024 capex of $921M focused on maintenance/regulatory ($761M), cost reduction ($48M) and strategic growth ($112M). Returned $643M to shareholders through dividends.

Management Commentary

Q4 earnings stabilized and we intend to accelerate earnings improvement in 2025

2025 will be transformational with disciplined execution to reduce costs and balance capacity

Taking actions to optimize box plant system and deliver service excellence

Mill reliability and operational issues created headwinds in 2024

Overall Sentiment: Cautiously optimistic with focus on executing cost reduction and operational improvement initiatives

Recommendation

Rating: Hold

Reason for Rating: Hold rating reflects stabilizing fundamentals but execution risk in turnaround

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 7:35:33 AM