ip-20240331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

_________________________________________

Commission File Number 001-03157

INTERNATIONAL PAPER COMPANY

(Exact name of registrant as specified in its charter)


New York			13-0872805
(State or other jurisdiction of incorporation)			(I.R.S. Employer Identification No.)

6400 Poplar Avenue, Memphis, Tennessee			38197
(Address of Principal Executive Offices)			(Zip Code)

Registrant’s telephone number, including area code: (901) 419-9000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares	IP	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (paragraph 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange

Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, par value $1.00 per share, as of April 19, 2024 was 347,332,324.

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INDEX


		PAGE NO.
	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Statement of Operations - Three Months Ended March 31, 2024 and 2023	1

	Condensed Consolidated Statement of Comprehensive Income - Three Months Ended March 31, 2024 and 2023	2

	Condensed Consolidated Balance Sheet - March 31, 2024 and December 31, 2023	3

	Condensed Consolidated Statement of Cash Flows - Three Months Ended March 31, 2024 and 2023	4

	Condensed Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	34

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 3.	Defaults Upon Senior Securities	39

Item 4.	Mine Safety Disclosures	39

Item 5.	Other Information	39

Item 6.	Exhibits	40

Signatures		41

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PART I. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

INTERNATIONAL PAPER COMPANY

Condensed Consolidated Statement of Operations

(Unaudited)

(In millions, except per share amounts)


	Three Months Ended March 31,
	2024		2023
Net Sales	$	4,619	$	5,020
Costs and Expenses
Cost of products sold	3,424		3,642
Selling and administrative expenses	358		381
Depreciation, amortization and cost of timber harvested	278		241
Distribution expenses	391		422
Taxes other than payroll and income taxes	41		36
Restructuring and other charges, net	3		—
Net (gains) losses on sales of fixed assets	5		—
Interest expense, net	46		62
Non-operating pension expense (income)	(12)		15
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings (Loss)	85		221
Income tax provision (benefit)	27		48
Equity earnings (loss), net of taxes	(2)		(1)
Earnings (Loss) From Continuing Operations	56		172
Discontinued operations, net of taxes	—		—
Net Earnings (Loss)	$	56	$	172
Basic Earnings (Loss) Per Share
Earnings (loss) from continuing operations	$	0.16	$	0.49
Discontinued operations, net of taxes	—		—
Net earnings (loss)	$	0.16	$	0.49
Diluted Earnings (Loss) Per Share
Earnings (loss) from continuing operations	$	0.16	$	0.49
Discontinued operations, net of taxes	—		—
Net earnings (loss)	$	0.16	$	0.49
Average Shares of Common Stock Outstanding – assuming dilution	348.5		353.3

The accompanying notes are an integral part of these condensed financial statements.

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INTERNATIONAL PAPER COMPANY

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

(In millions)


	Three Months Ended March 31,
	2024		2023
Net Earnings (Loss)	$	56	$	172
Other Comprehensive Income (Loss), Net of Tax:
Amortization of pension and post-retirement prior service costs and net loss:
U.S. plans	17		23
Change in cumulative foreign currency translation adjustment	(10)		(9)
Total Other Comprehensive Income (Loss), Net of Tax	7		14
Comprehensive Income (Loss)	$	63	$	186

The accompanying notes are an integral part of these condensed financial statements.

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INTERNATIONAL PAPER COMPANY

Condensed Consolidated Balance Sheet

(In millions)


	March 31, 2024		December 31, 2023
	(unaudited)
Assets
Current Assets
Cash and temporary investments	$	1,070	$	1,113
Accounts and notes receivable, net	3,048		3,059
Contract assets	430		433
Inventories	1,771		1,889
Other current assets	140		114
Total Current Assets	6,459		6,608
Plants, Properties and Equipment, net	10,027		10,150
Investments	160		163
Long-Term Financial Assets of Variable Interest Entities (Note 14)	2,317		2,312
Goodwill	3,041		3,041
Overfunded Pension Plan Assets	145		118
Right of Use Assets	445		448
Deferred Charges and Other Assets	434		421
Total Assets	$	23,028	$	23,261
Liabilities and Equity
Current Liabilities
Notes payable and current maturities of long-term debt	$	138	$	138
Accounts payable	2,322		2,442
Accrued payroll and benefits	378		397
Other current liabilities	1,016		982
Total Current Liabilities	3,854		3,959
Long-Term Debt	5,453		5,455
Long-Term Nonrecourse Financial Liabilities of Variable Interest Entities (Note 14)	2,115		2,113
Deferred Income Taxes	1,541		1,552
Underfunded Pension Benefit Obligation	279		280
Postretirement and Postemployment Benefit Obligation	137		140
Long-Term Lease Obligations	307		312
Other Liabilities	1,085		1,095
Equity
Common stock, $1 par value, 2024 – 448.9 shares and 2023 – 448.9 shares	449		449
Paid-in capital	4,663		4,730
Retained earnings	9,386		9,491
Accumulated other comprehensive loss	(1,558)		(1,565)
	12,940		13,105
Less: Common stock held in treasury, at cost, 2024 – 101.6 shares and 2023 – 102.9 shares	4,683		4,750
Total Equity	8,257		8,355
Total Liabilities and Equity	$	23,028	$	23,261

The accompanying notes are an integral part of these condensed financial statements.

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INTERNATIONAL PAPER COMPANY

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(In millions)


	Three Months Ended March 31,
	2024		2023
Operating Activities
Net earnings (loss)	$	56	$	172
Depreciation, amortization and cost of timber harvested	278		241
Deferred income tax provision (benefit), net	(11)		(2)
Restructuring and other charges, net	3		—
Net (gains) losses on sales and impairments of equity method investments	—		43
Net (gains) losses on sales of fixed assets	5		—
Equity (earnings) losses, net of taxes	2		(42)
Periodic pension (income) expense, net	(2)		26
Other, net	32		39
Changes in current assets and liabilities
Accounts and notes receivable	7		103
Contract assets	2		(52)
Inventories	76		52
Accounts payable and accrued liabilities	(44)		(203)
Interest payable	17		(5)
Other	(26)		(27)
Cash Provided By (Used For) Operations	395		345
Investment Activities
Invested in capital projects	(251)		(341)
Proceeds from sale of fixed assets	1		2
Other	3		—
Cash Provided By (Used For) Investment Activities	(247)		(339)
Financing Activities
Repurchases of common stock and payments of restricted stock tax withholding	(22)		(177)
Issuance of debt	—		670
Reduction of debt	(3)		(413)
Change in book overdrafts	(5)		(26)
Dividends paid	(161)		(162)
Cash Provided By (Used For) Financing Activities	(191)		(108)
Effect of Exchange Rate Changes on Cash and Temporary Investments	—		6
Change in Cash and Temporary Investments	(43)		(96)
Cash and Temporary Investments
Beginning of period	1,113		804
End of period	$	1,070	$	708

The accompanying notes are an integral part of these condensed financial statements.

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INTERNATIONAL PAPER COMPANY

Condensed Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States and in accordance with the instructions to Form 10-Q and, in the opinion of management, include all adjustments that are necessary for the fair presentation of International Paper Company’s ("International Paper's," "the Company’s," "IP's" or "our") financial position, results of operations, and cash flows for the interim periods presented. Except as disclosed herein, such adjustments are of a normal, recurring nature. Results for the first three months of the year may not necessarily be indicative of full year results. You should read these unaudited condensed financial statements in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report"), which have previously been filed with the U.S. Securities and Exchange Commission ("SEC").

These unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States that require the use of management’s estimates. Actual results could differ from management’s estimates.

NOTE 2 - RECENT ACCOUNTING DEVELOPMENTS

Recently Adopted Accounting Pronouncements

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This guidance provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This guidance is effective upon issuance and generally can be applied through December 31, 2024. The Company has applied and will continue to apply this guidance to account for contract modifications due to changes in reference rates as those modifications occur. We do not expect this guidance to have a material impact on our consolidated financial statements and related disclosures.

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." This guidance requires companies to disclose incremental segment information on an annual and interim basis. This guidance is effective for annual reporting periods beginning after December 15, 2023 and interim periods within those years beginning after December 15, 2024. Early adoption of these amendments is permitted and amendments are required to be applied retrospectively to all prior periods presented in the financial statements. The Company adopted this guidance as of January 1, 2024 and will update disclosures within the Company's 2024 annual filing.

Recently Issued Accounting Pronouncements Not Yet Adopted

Income Taxes

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." This guidance requires companies to enhance income tax disclosures, particularly around rate reconciliations and income taxes paid information. This guidance is effective for annual reporting periods beginning after December 15, 2024. Early adoption of these amendments is permitted and amendments should be applied prospectively. The Company is currently evaluating the provisions of this guidance.

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NOTE 3 - REVENUE RECOGNITION

Generally, the Company recognizes revenue on a point-in-time basis when the customer takes title to the goods and assumes the risks and rewards for the goods. For customized goods where the Company has a legally enforceable right to payment for the goods, the Company recognizes revenue over time which, generally, is as the goods are produced.

Disaggregated Revenue


	Three Months Ended March 31, 2024
In millions	Industrial Packaging		Global Cellulose Fibers		Corporate & Intersegment		Total
Primary Geographical Markets (a)
United States	$	3,239	$	650	$	107	$	3,996
Europe, Middle East & Africa ("EMEA")	348		20		—		368
Pacific Rim and Asia	14		34		—		48
Americas, other than U.S.	207		—		—

SEC Form 10-Q filed by International Paper Company