) reported operating earnings (excluding one-time items) of $265
million or 61 cents per share for the first quarter of 2014
compared with $292 million or 65 cents in the year-ago quarter.
The quarterly operating earnings beat the Zacks Consensus
Estimate of 57 cents.
Net loss for the reported quarter was $95 million or 21 cents per
share compared with a net income of $318 million or 71 cents per
share in the year-earlier quarter. The decline in earnings was
due to a pre tax charge of 495 million associated with the
Courtland mill shut down.
Net sales for the reported quarter were $7,014 million versus
$7,090 million in the year-ago quarter. However, the quarterly
sales missed the Zacks Consensus Estimate of $7,020 million. The
year-over-year decrease in sales was due to unfavorable weather
conditions and lower revenues from Printing Papers and
Distribution, partially offset by Industrial Packaging.
: Sales from this segment increased 3.7% year over year to $3,693
million in the reported quarter. Operating income stood at $453
million in the reported quarter versus $355 million in the
year-ago quarter. The increase in year-over-year operating income
was driven by higher selling prices for boxes.
: Sales were down 8.7% year over year to $1,406 million in the
reported quarter, while operating loss was $410 million versus
operating income of $149 million in the year-ago quarter. The dip
in operating income was primarily due to costs and lower volume
associated with the Courtland mill closure and the impact of
severe weather conditions.
: Sales from this segment decreased 0.1% year over year to $829
million. Operating profit was $17 million versus $7 million in
the year-ago quarter. The increase in operating profit was driven
by improved pricing.
): Sales for the segment declined 5.9% year over year to $1,302
million. The segment reported an operating profit of $5 million
versus an operating loss of $5 million in the year-ago quarter.
The increase in earnings was driven by slightly improved margins,
lower spending and lower overhead costs partially offset by
weaker sales in the reported quarter.
Cash and temporary investments aggregated $1,341 million at
quarter end. Cash flow from operating activities stood at $471
million as of Mar 31 2014, while long-term debt was $8.8 billion.
International Paper recorded Ilim Joint Venture equity losses of
$31 million in the reported quarter versus equity loss of $12
million in fourth quarter 2013.
Earlier in Jan 2014, International Paper announced that its
distribution business xpedx will merge with a distribution
solution company, Unisource Worldwide, Inc., to form a new
publicly traded company. The merger is expected to close in the
middle of 2014.
The transaction will happen in a Reverse Morris Trust structure,
which is used when a parent company has a subsidiary that it
wants to sell in a tax-efficient manner. International Paper will
receive $400 million in cash and contribute the assets of xpedx
to a newly formed wholly-owned subsidiary called xpedx Holding
The subsidiary will be spun off into a new company. Following
the spin off, UWW Holdings, the parent company of Unisource
Worldwide, will merge with xpedx Holding Company. International
Paper will own 51% of the new company while the remaining stake
will go to UWW Holdings.
The newly formed publicly traded company is expected to create an
enhanced platform for profitable growth across packaging, print
and facility solutions. Post merger, the new company is expected
to have annual revenue in the range of $9 billion to $10 billion
and generate approximately $200 million in synergies. The new
company is likely to enhance top-line growth opportunities and
provide customers with innovative solutions in product packaging,
paper and print management, supply chain and logistics services
and facility solutions.
Despite a challenging environment, the company remains focused on
its initiatives that will help to expand its margins and generate
strong free cash flow in 2014. International Paper remains
bullish about its performance in 2014.
International Paper currently has a Zacks Rank #4 (Sell).
Other stocks that look promising and are worth a look now include
KapStone Paper and Packaging Corp.
Graphic Packaging Holding Co.
Berry Plastics Group, Inc
), each carrying a Zacks Rank #2 (Buy).
BERRY PLASTICS (BERY): Free Stock Analysis
GRAPHIC PKG HLD (GPK): Free Stock Analysis
INTL PAPER (IP): Free Stock Analysis Report
KAPSTONE PAPER (KS): Free Stock Analysis
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