Input costs in the third quarter rose by about $230 million or $0.46 per share, which was more than 2 times what we had anticipated, with cost pressure in just about every category.
Our Ilim joint venture delivered another strong performance, with equity earnings of $95 million.
In the third quarter, we reduced debt by $235 million.
In the third quarter, we also returned $411 million to our shareholders, including $212 million of share repurchases.
IP received a $1.4 billion payment from Sylvamo, and we retained a 19.9% interest in the new company, which we intend to monetize within one year.
We delivered EBITDA of $938 million and free cash flow of $519 million in the third quarter, which brings our free cash flow nearly $1.6 billion year-to-date.
Revenue increased by nearly $600 million or 12% when compared to last year.
And if we exclude the Printing Papers business, third quarter revenue grew by 14% as compared to last year.
Moving to the quarter-over-quarter earnings bridge on slide five, third quarter operating earnings per share were $1.35 as compared to $1.06 in the second quarter.
Price and mix improved by $0.43 per share, with strong price realization across the three businesses.
Operating costs benefited by about $35 million of onetime items, including the sale of nitrogen credits and insurance recovery related to the winter storm earlier this year.
Input costs rose by $0.46 per share or about $230 million, which is more than double what we had anticipated for the quarter.
Higher fiber and energy cost accounted for about 80% of this increase.
Tax expense was lower by $0.04 per share in the third quarter, with an effective tax rate of 18% as compared to 21% in the second quarter.
Third quarter shipment across our U.S. channels improved by 1.3% year-over-year.
Our March increase is essentially fully implemented, with $128 million of price realization in the third quarter.
Volume was lower by $45 million.
Volume in EMEA was seasonally slower, as expected, representing about $10 million of the sequential decrease.
Our mill system performed at 100% and provided much needed inventory relief to our box system.
In the third quarter, we also received insurance proceeds of about $15 million related to the winter storm.
Input costs increased by nearly $190 million in the quarter.
OCC and wood fiber accounted for $120 million of that total.
Energy accounted for another $45 million, primarily in our recycled containerboard mills and our box plants.
Taking a closer look at fiber, our North American packaging fiber mix is around 65% virgin wood and 35% OCC.
As a reminder, we consume about 4.5 million tons annually in the U.S. and nearly 0.5 million tons in EMEA.
The business delivered earnings of $96 million.
Third quarter segment earnings included $13 million from the Sylvamo subsidiary and the Kwidzyn mill, which are no longer part of our operations in the fourth quarter.
Looking at our sequential earnings, price and mix improved by $59 million.
Volume improved by $11 million sequentially.
Demand for fluff pulp, which represents about 75 of our -- 75% of our mix remained solid.
Keep in mind that we export about 90% of our volume in this business.
We also benefited from about $20 million of onetime items related to the sale of nitrogen credits and lower corporate costs in the quarter.
These benefits were largely offset by $50 million of higher supply chain costs for export operations.
The business delivered earnings of $106 million in the third quarter, with strong momentum ahead of the spinoff.
Third quarter results includes the Kwidzyn mill until the sale on August 6.
The joint venture delivered another quarter of strong performance with equity earnings of $95 million and an EBITDA margin of 44%.
In Industrial Packaging, we expect price and mix to improve by $70 million, mostly on the realization of our August 2021 price increase.
Volume is expected to improve by $65 million sequentially on strong seasonal demand even as we cut down free shipping days.
Operations and costs are expected to improve by $5 million, with the North American system benefiting from improved containerboard inventory levels, partly offset by onetime benefits in the third quarter.
Staying with Industrial Packaging, maintenance outage expense is expected to increase by $3 million.
Input costs are expected to increase by $50 million, mostly on the flow-through of higher third quarter input costs for fiber and energy.
Volume is expected to decrease by $5 million.
Operations and costs are expected to decrease earnings by $25 million due to the non-repeat of onetime benefits in the third quarter.
Maintenance outage expense is expected to increase by $37 million.
And input costs are expected to increase by $15 million on higher wood and energy costs.
On our outlook slide, we include the sequential earnings adjustment associated with the Printing Papers' spin and Kwidzyn sale for a total of $134 million across the three segments.
With regard to cash flow, I would note that our cash from operations in the second half 2021 includes cash taxes of about $450 million associated with the various monetization transactions from earlier this year.
As we previously said, we're comfortable taking our leverage below the stated target of 2.5 times to 2.8 times debt-to-EBITDA on a Moody's basis.
In the third quarter, we reduced debt by $235 million, which brings our year-to-date debt reduction to $1.1 billion.
We will also complete an additional $800 million of debt repayment by the end of this month.
In the third quarter, we returned $411 million to share owners through dividends and share repurchases.
Share repurchases were $212 million, which represented about 3.6 million shares at an average price of $59.13.
Also earlier this month, the Board of Directors approved an additional $2 billion share repurchase program, which raises our total available authorizations to $3.3 billion.
We are committed to a competitive and sustainable dividend, with a payout of 40% to 50% of free cash flow, which we will continue to review annually as earnings and cash flow grow.
Earlier this month, we decreased our dividend by 9.8% to $1.85 per share annually, following the spin-off of the papers business.
This adjustment is well below the 15% to 20% proportion of cash previously generated by the papers business as we outlined when we announced the spin last year.
We expect Capex in 2021 to be around $600 million, which is less than our original plan, primarily due to the timing of equipment delivery and a more challenging contract labor environment.
We will deliver $200 million to $225 million of gross incremental earnings in 2022.
That represents more than 2 times the dis-synergies resulting from the spin-off.
Our value drivers ramp up in '23 and 2024, with net incremental earnings of $350 million to $400 million in 2024.
These include around $300 million in cost reduction initiatives and at least $50 million through commercial and investment initiatives.
We redesigned our sourcing process for our 200 converting facilities.

Summary:
Moving to the quarter-over-quarter earnings bridge on slide five, third quarter operating earnings per share were $1.35 as compared to $1.06 in the second quarter.
The business delivered earnings of $106 million in the third quarter, with strong momentum ahead of the spinoff.