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A month has gone by since the last earnings report for International Paper (IP). Shares have added about 15.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is International Paper due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
International Paper Q4 Earnings Lag Estimates, Down Y/Y
International Paper reported fourth-quarter 2020 adjusted earnings of 75 cents per share, which missed the Zacks Consensus Estimate of 84 cents. The bottom line also declined 31% year over year from $1.09 reported in the prior year quarter due to higher input and operating costs.
Including one-time items, the company posted earnings per share of 39 cents in fourth-quarter 2020 compared with the year-ago quarter’s 42 cents.
Net sales declined 5% to $5.24 billion in the fourth quarter from the year-ago quarter. The top line also lagged the Zacks Consensus Estimate of $5.26 billion.
Adjusted cost of sales was $3,654 million, up 1% from the prior-year quarter’s $3,620 million. Gross profit declined 16% year over year to $1,585 million. Adjusted selling and administrative expenses fell 10% year over year to $396 million during the reported quarter. Adjusted operating profit was $296 million, reflecting year-over-year plunge of 31% due to higher input and operating costs.
Segment Performance
Industrial Packaging: Sales in this segment remained flat year over year at $3.8 billion. Operating profit fell 29% year over year to $431 million.
Global Cellulose Fibers: In the reported quarter, the segment’s sales inched up 1% to $582 million from the prior-year quarter. The segment incurred an operating loss of $114 million in the quarter under review, compared with the year-ago quarter’s operating loss of $45 million.
Printing Papers: Sales of this segment amounted to $802 million, reflecting a plunge of 25% from the year-earlier quarter. The segment’s operating profit declined 27% year over year to $80 million in fourth-quarter 2020.
Financial Position
Cash and temporary investments aggregated $595 million as of Dec 31, 2020 compared with $511 million as of Dec 31, 2019. Through 2020, the company returned $800 million to shareholders and reduced debt by $1.7 billion. As of 2020-end, the company’s long-term debt was at $8.1 billion.
Cash flow from operating activities was $3 billion in 2020 compared with $3.6 billion in the prior year. Free cash flow was $2.3 billion in 2020, flat compared with the prior year.