TICONDEROGA - International Paper's first-quarter earnings were buoyed by a $558 million pre-tax credit for the production and use of an alternative fuel, according to an earnings report released today.
For the quarter ended March 31, the paper maker posted a 93 percent increase in net earnings to $257 million, or 61 cents per share. During the same period in 2008, the firm reported earnings of $133 million, or 31 cents per share.
IP qualified for the IRS alternative fuel mixture credit - which amounted to $330 million after taxes, or 78 cents per share, because it produced a biofuel known as black liquor.
The fuel, a by-product of the wood pulping process, powers IP's mills and is made at 20 facilities, including the Ticonderoga facility.
The tax credit expires at the end of the year.
"The availability of this tax credit is both timely and beneficial for our shareholders, employees, customers and the communities in which we operate," John Faraci, IP's chairman and chief executive, said in a prepared statement. "The funds provide important flexibility as the company strengthens its balance sheet while protecting as many jobs as we can in a challenging economy."
Net sales for the quarter were $5.7 billion, break-even with sales from the first quarter of 2008.
During the three-month period, IP had a number of one-time expenses. The company spent $36 million to integrate its industrial packaging business, $23 million to close a mill in Scotland, and $6 million to close its Franklin, Va., facility.
Another $52 million went to severance and benefits associated with 2008 layoffs.
The company saw growth in its industrial packaging and consumer packaging profits between the fourth and first quarters. However, printing paper profits declined from quarter to quarter on weak demand. And the company's distribution business, xpedx, reported an operating loss of $7 million.
In addition, the company's land sales slowed due to the economic downturn. IP reported $2 million in operating profits for forest products, down from $38 million in the fourth quarter of 2008.
The company's previously announced sale of 143,000 acres is expected to close by the end of the third quarter, subject to the buyer's receipt of financing.
At the end of the quarter, International Paper had $3.5 billion in cash and committed facilities. During the quarter, the company recorded $666 million of free cash flow and repaid $550 million of debt.
"Six months into the weakest economic environment we've seen in decades, we continue to execute well," Faraci said. "During the quarter, we also benefited from lower input costs, the realization of integration synergies and reduced overhead spending."