Thursday, February 3, 2011

IP F4Q10 Earnings 2/3/2011 - Jeremy Pellizzari

International Paper Co. released their 4th quarter earnings on February 3 and showed an adjusted EPS of $0.68, which is more than triple that from the year prior. They also turned in revenues of $6.5 billion, a 9% year over year increase. International Paper was able to have what they called their best 4th quarter in ten years due to solid volume, pricing, and cost performance. A highlight from the earnings call pointed out the strong margin expansion both in the 4th quarter and throughout the year. In the 4th quarter, margins expanded 240 basis points, which is actually more than the annual expansion of 110 basis points. On an annual basis, IP earnings were just of $2 per share and they had a strong free cash flow of $1.7 billion. Sales finished the year up 8% and ended the year with a lower debt level and a solid cash balance of $2 billion.

Broken down into segments, the Industrial Packaging segment had revenue growth of 16% year over year and adjusted operating profits of $274 million, a 226% year over year increase. The printing papers segment showed a 1% increase in revenue with a 70% increase in adjusted operating profit to $236 million. Consumer packing posted revenues of $880 million, up 12% year over year, and also increased their adjusted operating profits to $64 million. Xpedx, the company’s distribution business, reported revenues of $1.77 billion and actually showed a decrease in year over year operating profits of 71%, down to $9 million.

As for the future, International Paper Co. has highlighted the ability of their company to produce high amounts of free cash flow and expansion in foreign markets as factors of continuing success. As well as producing a solid year of earnings, IP was able to raise their dividends back to the pre-recession level of $.75 cents per share.

Jeremy Pellizzari - Junior Analyst

No comments: