By the numbers: Q4 and full-year 2024
Q4 net sales: $4.58B
Down 0.5% year over year
Full-year net sales: $18.62B
Down 1.6% year over year
Q4 industrial packaging net sales: $3.87B
Up 0.7% year over year
Full-year industrial packaging net sales: $15.53B
Down 0.4% year over year
- Overview: “While we certainly don't like the reality of the results in the fourth quarter, it is exactly what we had expected,” said CEO Andy Silvernail on the company’s Thursday earnings call. IP has focused on implementing the strategy reset plan Silvernail introduced last July, which puts an emphasis on customer service and reliability. Data for metrics like on-time delivery shows positive movement in customer service performance, he said, citing “an entire standard deviation” of improvement. “We still have to finish digging out of that hole. ... But I like where we are relative to our plan,” Silvernail said.
- DS Smith deal: IP’s acquisition of DS Smith is slated to close Friday, following U.K. court approval for DS Smith on Thursday. Last week, the European Commission approved the deal, given IP would divest five box plants to alleviate competition concerns in certain European markets. “We’re committed to identifying suitable buyers who can offer a viable future for these teams,” Silvernail said on the earnings call.
- Cost-cutting plan update: “Our go-to-market ‘value over volume’ reset is essentially complete,” Silvernail said. IP has been running two pilot programs for its new 80/20 strategy, and “the gains that we're ... seeing encourage the heck out of us,” Silvernail said. IP plans to scale the initiative to 22 box plants this year. The pilot sites delivered more than 20% productivity gains, Silvernail said. He noted that IP’s decision to close five box plants and its pulp mill in Georgetown, South Carolina, in Q4 collectively is expected to remove about $110 million in costs from its annual run-rate.
- New box plant: IP initiated an overhaul to simplify and speed its capital investment process, Silvernail said. It prioritizes strategic box plant investments, including a newly announced greenfield box plant in Waterloo, Iowa. The facility will be located near important customers, such as in the protein segment, in addition to having freight access to one of IP’s mills. Construction is expected to begin this year, and start up is anticipated in mid-2026. This is “by far the largest box plant investment we have ever made,” Silvernail said. "The goal is, over the next few years, to completely reconfigure our box plant network.”
- More M&A: IP also is acquiring a bulk plant in West Monroe, Louisiana, that will allow for growth in its specialty products business; the deal is expected to close Friday, separately from the DS Smith transaction. IP is still determining what to do with its global cellulose fibers business unit, which had an operating loss of $250 million in Q4, but previously the company had indicated a sale is likely. Silvernail characterized the GCF business as more volatile than the core packaging business.
- Outlook: While Silvernail said he expects 2025 to be a “transformational year,” the company will not give a detailed forecast due to regulatory constraints with the pending DS Smith deal. Generally speaking, the “stabilization trend” and earnings improvements are expected to continue in Q1, and the second half of the year will look better than the first, Silvernail projected. “We need to exit this year substantially better than where we were last year,” he said. “Turnarounds take time, and they are not linear.” At an investor day on March 25, executives intend to provide a company outlook and detailed roadmap, along with progress on the DS Smith integration and the Waterloo box plant.
