MEMPHIS, Tenn., April 25, 2024 /PRNewswire/ -- International Paper (NYSE:IP) today reported first quarter 2024 financial results. FIRST QUARTER 2024 HIGHLIGHTS First quarter net earnings of $56 million ($0.16 per diluted share) First quarter adjusted operating earnings (non-GAAP) of $61 million ($0.17 per diluted share) First quarter results negatively impacted by approximately $52 million (pre-tax) due to January freeze and Ixtac, Mexico fire First quarter cash provided by operations of $395 million and returned $161 million to shareholders in dividends "International Paper made progress executing our strategic initiatives in the first quarter,'' said Mark Sutton, Chairman and Chief Executive Officer. "We saw commercial benefits from our business strategies, as well as cost benefits from mill system optimization. Although costs remain elevated and volumes were seasonally lower in the quarter, market trends continue to improve." "Looking ahead," Sutton added, "International Paper is well positioned for its next chapter as Andy Silvernail steps into the CEO role on May 1. I am confident that his leadership experience and proven track record, paired with the industry expertise of our senior leadership team, will amplify the company's success going forward. On a personal note, it has been a privilege to be part of the IP team for the past 40 years and an honor to lead the company for the past decade." Diluted Net EPS and Adjusted Operating EPS First Quarter 2024 Fourth Quarter 2023 First Quarter 2023 Net Earnings (Loss) $               0.16 $             (0.82) $              0.49 Less – Discontinued Operations (Gain) Loss, Net of Taxes — — — Net Earnings (Loss) from Continuing Operations 0.16 (0.82) 0.49 Add Back – Non-Operating Pension Expense (Income) (0.04) 0.04 0.04 Add Back – Net Special Items Expense (Income) 0.05 1.58 0.01 Income Taxes - Non-Operating Pension and Special Items — (0.39) (0.01) Adjusted Operating Earnings* $               0.17 $               0.41 $              0.53 *  Adjusted operating earnings (non-GAAP) is defined as net earnings (loss) (GAAP) excluding discontinued operations, net special items and non-operating pension expense (income). Management uses this measure to focus on on-going operations, and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present consolidated operating results from continuing operations. For discussion of discontinued operations, net special items and non-operating pension expense (income), see the disclosure under Effects of Net Special Items, Discontinued Operations, Net of Taxes and Consolidated Statement of Operations and related notes included later in this release. A reconciliation of net earnings (loss) to adjusted operating earnings is included later in this release.   Select Financial Measures (In millions) First Quarter 2024 Fourth Quarter 2023 First Quarter 2023 Net Sales $         4,619 $         4,601 $         5,020 Net Earnings (Loss) 56 (284) 172 Business Segment Operating Profit (Loss) 169 257 306   Adjusted Operating Earnings 61 142 185 Cash Provided By (Used For) Operations 395 492 345 Free Cash Flow** 144 187 4 ** Free cash flow is a non-GAAP financial measure. The most directly comparable GAAP measure is cash provided by (used for) operations. A reconciliation of cash provided by (used for) operations to free cash flow and an explanation of why we believe that free cash flow provides useful information to investors, is included later in this release. SEGMENT INFORMATIONBusiness segment operating profits are used by International Paper's management to measure the earnings performance of the Company's businesses and are calculated as set forth in footnote (e) below under "Sales and Earnings by Business Segment". First quarter 2024 net sales by business segment and operating profit (loss) by business segment compared with the fourth quarter of 2023 and the first quarter of 2023 are as follows: Business Segment Results (In millions) First Quarter 2024 Fourth Quarter 2023 First Quarter 2023 Net Sales by Business Segment Industrial Packaging $             3,808 $            3,842 $             4,083 Global Cellulose Fibers 704 656 811 Corporate and Inter-segment Sales 107 103 126 Net Sales $             4,619 $            4,601 $             5,020 Operating Profit (Loss) by Business Segment Industrial Packaging $                216 $               315 $                322 Global Cellulose Fibers (47) (58) (16) Total Business Segment Operating Profit (Loss) $                169 $               257 $                306 Industrial Packaging operating profits (losses) in the first quarter of 2024 were $216 million compared with $315 million in the fourth quarter of 2023. In North America, earnings benefited from higher sales prices for boxes reflecting the benefits of our commercial efforts and higher sales prices for containerboard. These benefits were more than offset by seasonally lower volumes, higher planned outage costs and higher input costs, primarily for recovered fiber. Additionally, operating costs were higher including the impact of the winter freeze and Ixtac, Mexico fire. Economic downtime was lower, reflecting the impact of mill strategic actions taken in the fourth quarter of 2023. In EMEA, earnings were lower, as the benefits of lower operating costs and lower planned maintenance outage costs were more than offset by the non-repeat of an energy subsidy and other favorable one-time items in the fourth quarter of 2023.    Global Cellulose Fibers operating profits (losses) in the first quarter of 2024 were $(47) million compared with $(58) million in the fourth quarter of 2023. Regional demand for absorbent fluff products is improving in mature economies while demand is generally stable in the developing economies. Higher pulp pricing, improved product mix and lower planned outage costs were partially offset by higher operating costs. Economic downtime was lower, reflecting the impact of the mill strategic actions taken in the second half of 2023. Input costs were higher, primarily for energy. CORPORATE EXPENSESCorporate expenses, net was expense of $24 million fdor the first quarter of 2024 compared with a net benefit of $9 million in the fourth quarter of 2023. EFFECTS OF SPECIAL ITEMSNet special items in the first quarter of 2024 amount to a net after-tax charge of $14 million ($0.04 per diluted share) compared with a charge of $415 million ($1.20 per diluted share) in the fourth quarter of 2023 and a charge of $2 million ($0.01 per diluted share) in the first quarter of 2023. Net special items in all periods include the following charges (gains): First Quarter 2024 Fourth Quarter 2023 First Quarter 2023 (In millions) Before Tax After Tax Before Tax After Tax Before Tax After Tax  Restructuring and other charges, net: Severance and other costs (a) $               3 $              2 $           118 $             89 $             — $             — Building a Better IP — — (19) (14) — — Total restructuring and other charges, net 3 2 99 75 — — Accelerated depreciation (a) 5 4 422 317 — — Legal reserve adjustments 10 7 — — — — Net loss on miscellaneous land sales 5 4 — — — — DS Smith combination costs 5 4 — — — — Equity method investment impairment — — 18 14 — — Environmental remediation reserve adjustment — — 7 5 — — Interest related to the timber monetization settlement — — — — 3 2 Interest related to settlement of tax audits (10) (7) — — — — Tax expense related to legal entity restructuring — — — 4 — —  Total special items, net $             18 $            14 $           546 $           415 $               3 $               2 (a) Amounts associated with mill strategic actions. See notes (c) and (d) on the Consolidated Statement of Operations included later in this release. ANNOUNCED ACQUISITIONOn April 16, 2024, the Company issued an announcement pursuant to Rule 2.7 of the City Code on Takeovers and Mergers, disclosing the terms of a recommended offer by the Company to acquire the entire issued and to be issued share capital of DS Smith Plc, a public limited company incorporated in England and Wales ("DS Smith"), in an all-stock transaction (the "Business Combination"). Under the terms of the Business Combination, each DS Smith share will be valued at 415 pence per share based on the Company's closing share price of $40.85 and GBP/USD exchange rate of 1.2645 on March 25, 2024, being the close of business on the last day prior to the announcement by DS Smith of a previously disclosed possible offer by the Company. This will result in IP issuing 0.1285 shares for each DS Smith share, resulting in pro forma ownership of 66.3% for IP shareholders and 33.7% for DS Smith shareholders, with an implied enterprise value of approximately $9.9 billion. Costs related to the transaction were $5 million for the three months ended March 31, 2024. In connection with the Business Combination, the Company also intends to seek a secondary listing of the International Paper common stock ("Common Stock") on the London Stock Exchange. Following completion of the Business Combination, Memphis, Tennessee will be the headquarters of the combined company, with plans to establish a Europe, Middle East and Africa (EMEA) headquarters at DS Smith's existing London headquarters. Upon the closing of the Business Combination, it is intended that the Company's board of directors will form the board of directors of the combined company, and that up to two directors of DS Smith will be invited to join the board of directors of the combined company. Mr. Andrew K. Silvernail will be the Chief Executive Officer of the combined company. The transaction is expected to close during the fourth quarter of 2024, subject to the approval of IP shareholders and DS Smith shareholders, as well as customary closing conditions, including regulatory clearances in Europe and the U.S. EARNINGS WEBCAST The company will host a webcast today to discuss earnings and current market conditions, beginning at 10 a.m. ET (9 a.m. CT). All interested parties are invited to listen to the webcast via the company's website by clicking on the Investors tab and going to the Events & Presentations page at https://www.internationalpaper.com/investors/events-presentations. A replay of the webcast will also be on the website beginning approximately two hours after the call. Parties who wish to participate in the webcast via teleconference may dial +1 (234) 720-6985 or, within the U.S. only, (877) 336-4437, and ask to be connected to the International Paper first quarter earnings call. The conference ID number is 4423602. Participants should call in no later than 9:45 a.m. ET (8:45 a.m. CT). An audio-only replay will be available for ninety days following the call. To access the replay, dial +1 (402) 970-0847 or, within the U.S. only, (866) 207-1041 and when prompted for the conference ID, enter 6943268. About International Paper International Paper (NYSE:IP) is a global producer of sustainable packaging, pulp and other fiber-based products, and one of the world's largest recyclers. Headquartered in Memphis, Tenn., we employ approximately 39,000 colleagues globally who are committed to creating what's next. We serve customers worldwide, with manufacturing operations in North America, Latin America, North Africa and Europe. Net sales for 2023 were $18.9 billion. Additional information can be found by visiting internationalpaper.com. Visit https://www.internationalpaper.com/investors for more information regarding International Paper, including a slide presentation regarding the first quarter 2024. We use this website as a primary channel for disclosing key information to our investors, some of which may contain material and previously non-public information. Cautionary Statement Regarding Forward-Looking Statements Certain statements in this press release that are not historical in nature may be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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 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) 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); (v) the impact of ...