International Paper : First Quarter 2025 Reconciliation of Non-GAAP Financial Measures

Published: 2025-04-30 08:53:35 ET IP

This presentation includes certain non-GAAP financial measures. The calculation of these measures, and a reconciliation to previously reported comparable measures calculated in accordance with U.S. generally accepted accounting principles (GAAP) is shown below. The Company believes that this information, when used in conjunction with information presented in accordance with U.S. GAAP, can facilitate a better understanding of the impact of various factors and trends on the Company's financial condition and results of operations. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in accordance with GAAP. In addition, because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to similarly titled measures disclosed by other companies, including companies in our industry. This information should be used in conjunction with the Company's Quarterly Report on Form 10Q for the year ended March 31, 2025 and subsequently publicly filed financial reports.

Preliminary and Unaudited

(In millions, except per share amounts)

2025

2024

Net Earnings (Loss)

(105)

(147)

Add back: Non-operating pension expense (income)

(12)

(8)

Add back: Net Special items expense (income)

249

182

Income taxes - Non-operating pension and special items

(46)

(1)

(34)

Adjusted Operating Earnings

$ 101

$ 61

$ (7)

2025

2024

Diluted Earnings per Common Share as Reported

(0.24)

0.16

(0.42)

Add back: Non-operating pension expense (income)

0.01

(0.04)

(0.02)

Add back: Net Special items expense (income)

0.57

0.05

0.52

Income taxes - Non-operating pension and special items

(0.11)

(0.10)

Adjusted Operating Earnings per Share

$ 0.23

$ 0.17

(0.02)

Adjusted Operating Earnings and Adjusted Operating Earnings Per Share are non-GAAP financial 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 (non-GAAP) by excluding the after-tax effect of non-operating pension expense (income) and net special items, as described in greater detail in our current earnings release, from the net earnings (loss) reported under U.S. GAAP. Adjusted Operating Earnings Per Share is calculated by dividing Adjusted Operating Earnings by the diluted average shares of common stock outstanding. Management uses these non-GAAP financial measures to focus on on-going operations, and believes that such non-GAAP financial 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 financial measures, along with the most directly comparable GAAP measures, provides for a more complete analysis of the Company's results of operations.

Non-operating pension expense (income) represents amortization of prior service cost, amortization of actuarial gains/losses, expected return on assets and interest cost. The Company excludes these amounts from Adjusted Operating Earnings as the Company does not believe these items reflect ongoing operations. These particular pension cost elements are not directly attributable to current employee service. The Company includes service cost in our non-GAAP measure as it is directly attributable to employee service, and the corresponding employees' compensation elements, in connection with ongoing operations.

‌2024

2025

$ Millions

Full Year

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Year to Date

Earnings (Loss) Before Income Taxes and

Equity Earnings

$ 147

$ (135)

$ - $ - $ - $ (135)

Interest Expense, Net

208

- - - 81

Special Items

373

249

- - - 249

Non-operating pension expense (income)

(42)

- - - 3

EBIT before Special Items

686

198

- - - 198

Depreciation and amortization

1,300

571

- - - 571

EBITDA before Special Items

1,986

769

- - - 769

Annualized EBITDA before Special Items

1,986

3,076

- - - 3,076

Annualized Net Sales

18,619

23,604

- - - 23,604

Adjusted EBITDA Margin

10.7 %

13.0 %

- % - % - % 13.0 %

Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin are all "non-GAAP financial measures" presented as supplemental measures of our performance and the most directly comparable GAAP measure for Adjusted EBIT and Adjusted EBITDA is earnings (loss) before income taxes and equity earnings. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating the Company's performance over time, and that other companies use these and/or similar measures for similar purposes. However, Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for an analysis of our results as reported under GAAP. In addition, in evaluating Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin, you should be aware that in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

2023

2024

$ Millions

Full Year

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Year to Date

Earnings (Loss) Before Income Taxes and Equi Earnings

$ 382

$ 85

$ 206

$ 80

$ (224)

$ 147

Interest Expense, Net

231

208

Special Items

135

114

182

373

Non-operating pension expense (income)

(12)

(10)

(12)

(8)

(42)

EBIT before Special Items

802

147

300

233

686

Depreciation and amortization

1,432

273

261

267

499

1,300

EBITDA before Special Items

2,234 420

561

500

505

1,986

Annualized EBITDA before Special Items

2,234 1,680

2,244

2,000

2,020

1,986

Annualized Net Sales

18,916

18,476

18,936

18,744

18,320

18,619

Adjusted EBITDA Margin

11.8% 9.1%

11.9%

10.7%

11.0%

10.7%

Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin are all "non-GAAP financial measures" presented as supplemental measures of our performance and the most directly comparable GAAP measure for Adjusted EBIT and Adjusted EBITDA earnings (loss) before income taxes and equity earnings. They are not presented in accordance with accounting principles generally accepted in the United States or GAAP. The Company believes these measures provide additional meaningful information in evaluating the Company's performance over time and that other companies use these and/or similar measures for similar purposes. However, Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation or as substitutes for an analysis of our results as reported under GAAP. In addition, in evaluating Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin, you should be aware that in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

$ Millions Q1 2025 Q2 2025 Q3 2025 Q4 2025 YTD 2025

Business Segment Operating Profit

$ 142

$ - $ - $ - $ 142

Depreciation and Amortization

413

- - - 413

EBITDA before Special Items

555

- - - 555

Less: Recycling Business EBITDA

- - - 1

EBITDA before Special Items after Exclusions

554

- - - 554

Net Sales

3,702

- - - 3,702

Less: Trade Sales

- - - 98

Less: Recycling Business Net Sales

- - - 69

Net Sales after Exclusions

$ 3,535

$ - $ - $ - $ 3,535

Adjusted EBITDA Margin

15.7 %

- % - % - % 15.7 %

We use the non-GAAP financial measures Adjusted EBIT and Adjusted EBITDA margin, along with other factors, to evaluate our segment performance against our peers. We believe that investors use these measures to evaluate our performance relative to our peers. However, these non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.

$ Millions

Q1 2024

Q2 2024

Q3 2024

Q4 2024

YTD 2024

Business Segment Operating Profit

$ 192

$ 281

$ 190

$ 228

$ 891

Depreciation and Amortization

203

186

192

205

786

EBITDA before Special Items

395

467

382

433

1,677

Less: Recycling Business EBITDA

(1)

EBITDA before Special Items after Exclusions

389

465

378

434

1,666

Net Sales

3,486

3,628

3,640

3,539

14,293

Less: Trade Sales

108

104

380

Less: Recycling Business Net Sales

315

Net Sales after Exclusions

$ 3,323

$ 3,439

$ 3,472

$ 3,364

$ 13,598

Adjusted EBITDA Margin

11.7 %

13.5 %

10.9 %

12.9 %

12.3 %

$ Millions Q1 2025 Q2 2025 Q3 2025 Q4 2025 YTD 2025

Business Segment Operating Profit $ 46 $ - $ - $ - $ 46

Depreciation and Amortization 107 - - - 107

EBITDA before Special Items 153 - - - 153

Net Sales 1,550 - - - 1,550

Adjusted EBITDA Margin 9.9 % - % - % - % 9.9 %

$ Millions Q1 2024 Q2 2024 Q3 2024 Q4 2024 YTD 2024

Business Segment Operating Profit $ 24 $ 10 $ 7 $ 19 $ 60

Depreciation and Amortization

EBITDA before Special Items

124

Net Sales

348

328

322

357

1,355

Adjusted EBITDA Margin

11.5 %

7.9 %

7.1 %

9.8 %

9.2 %

$ Millions

Q1 2025

Q2 2025

Q3 2025

Q4 2025

YTD 2025

Business Segment Operating Profit

$ 17

$ -

$ 17

Depreciation and Amortization

EBITDA before Special Items

Net Sales

643

Adjusted EBITDA Margin

10.6 %

- %

10.6 %

$ Millions

Q1 2024

Q2 2024

Q3 2024

Q4 2024

YTD 2024

Business Segment Operating Profit

$ (47)

$ 31

$ 40

$ (250)

$ (226)

Depreciation and Amortization

278

450

EBITDA before Special Items

224

Net Sales

704

717

710

662

2,793

Adjusted EBITDA Margin

1.0 %

12.6 %

13.9 %

4.2 %

8.0 %

$ Millions Q1 2025 Q2 2025 Q3 2025 Q4 2025 YTD 2025

Business Segment Operating Profit

$ (9) $

- $ - $ - $ (9)

Depreciation and Amortization

- - - 16

EBITDA before Special Items $ 7 $ - $ - $ - $ 7

$ Millions Q1 2025 Q2 2025 Q3 2025 Q4 2025 YTD 2025

Business Segment Operating Profit

$ 13

$ - $ - $ - $ 13

Depreciation and Amortization

- - - 91

EBITDA before Special Items $ 104 $ - $ - $ - $ 104

‌$ Millions

Outlook

Earnings (Loss) Before Income Taxes and Equity Earnings

$1,111 - $1,611

$3,680 - $4,180

Interest Expense, Net

370

Special Items

249

Non-operating pension expense (income)

(30)

EBIT before Special Items

$1,700 - $2,200

$4,050 - $4,550

Depreciation and amortization

1,800

1,450

EBITDA before Special Items

$3,500 - $4,000

$5,500 - $6,000

Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin are all "non-GAAP financial measures" presented as supplemental measures of our performance and the most directly comparable GAAP measure for Adjusted EBIT and Adjusted EBITDA is earnings (loss) from continuing operations before income taxes and equity earnings. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating the Company's performance over time, and that other companies use these and/or similar measures for similar purposes. However, Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for an analysis of our results as reported under GAAP. In addition, in evaluating Adjusted EBIT, Adjusted EBITDA and Adjusted EBITDA Margin, you should be aware that in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

‌$ Millions

Packaging Solutions North America

Packaging Solutions EMEA

Global Cellulose Fibers

Business Segment Operating Profit

$1,260 - $1,460

$340 - $575

$90 - $190

Depreciation and Amortization

1,040

560

210

EBITDA before Special Items $2,300 - $2,500 $900 - $1,100 $300 - $400

Preliminary and Unaudited (In millions)

2025

2024

2023

Cash Provided By (Used For) Operating Activities

$ (288) $

395

397

$ 1,678

$ 1,833

Adjustments:

Cash invested in capital projects

(330)

(251)

(260)

(921)

(1,141)

Free Cash Flow

$ (618) $ 144

$ 137

$ 757 $ 692

Free cash flow is a non-GAAP financial measure which equals cash provided by (used for) operating activities less cash invested in capital projects. The most directly comparable GAAP measure is cash provided by 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.

The non-GAAP financial measures presented have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in accordance with GAAP. In addition, because not all companies use identical calculations, the Company's presentation of non-GAAP financial measures in this release may not be comparable to similarly titled measures disclosed by other companies, including companies in the same industry as International Paper.

Management believes non-GAAP financial measures, when used in conjunction with information presented in accordance with GAAP, can facilitate a better understanding of the impact of various factors and trends on the Company's financial results. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. Investors are cautioned to not place undue reliance on any non-GAAP financial measures used in this release.

‌$ Millions

2025

Full Year

2027

Full Year

Cash provided by (used for) Operating Activities

$1,900 - $2,200

$3,900 - $4,400

Adjustments:

Cash invested in capital projects

1,800 - 1,900

1,900

Forecasted Free Cash Flow

$100 - $300

$2,000 - $2,500

that the entire free cash flow amount is available for discretionary expenditures.

‌$ Millions

2024

2023

Earnings (Loss) from Continuing Operations Before Income Taxes and Equity Earnings

147

382

Special Items

363

132

Non-operating pension expense (income)

(42)

Operating Earnings (Loss) from Continuing Operations Before Income

Taxes and Equity Earnings

468

568

Income Tax Provision (Benefit)

(415)

Income Taxes - Non-Operating Pension and Special Items

478

Operational Income Tax Provision (Benefit)

$ 63

$ 127

Operational Tax Rate

13 %

22 %

Disclaimer

International Paper Company published this content on April 30, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 30, 2025 at 12:33 UTC.