Mercer International Inc. · NASDAQ:MERC
Mercer International — Q4 2023 Earnings Presentation
18 slides from Mercer International's earnings presentation, Feb 16, 2024
Slide 1: Q4 2023 Earnings Call
Mercer International Inc. Transforming biomass into bioproducts for a more sustainable world Q4 2023 Earnings Call February 16, 2024 Juan Carlos Bueno – President & CEO Richard Short – CFO, Executive VP & Secretary
Slide 2: Forward-looking Statements
Forward-looking Statements The Private Securities Litigation Reform Act of 1995 provides a For more information regarding these “safe harbor” for forward-looking statements. risks and uncertainties, review Mercer’s filings with the United States Securities and Exchange Commission. Certain informatio
Slide 3: Financial Results Overview
Financial Results Overview EBITDA Slightly Down vs. Q3 Highlights 2023 Full Change • The quarter-over-quarter decrease in EBITDA (US$ millions) Q3 2023 Q4 2023 EBITDA was driven by the sale of Year (+/-) previously impaired inventory and more days of planned downtime Pulp Segment $66 $49 $32 ($17) •
Slide 4: Pulp Prices
Pulp Segment Pulp Prices Pricing Overview NBSK and NBHK Bottomed in Q3 2023 Realized Pulp Price (US$ / tonne) Region Q3 2023 Q4 2023 NBSK List Price (US$ / tonne) China (net) $680 $748 Europe $1,160 $1,245 NBHK List Price (US$ / tonne) Domestic $1,023 $1,083 China (net) $530 $643 NBSK / NBHK Price G
Slide 5: Pulp Segment Key Performance Indicators
Pulp Segment Key Performance Indicators Production Volume (000s tonnes) Mill Downtime (Days) 528 508 539 480 26 days of curtailment at Celgar due to Increased scheduled logistical issues maintenance led to a ~$11 million EBITDA decrease vs Q3; partially offset by positive impact 39 of no curtailment
Slide 6: Lumber Overview
Solid Wood Segment Lumber Overview Benchmark Lumber Price Lumber Operations (mmfbm) Random Lengths WSPF 2&btr 2x4 (US$ / mfbm) $1,500 Production down due to maintenance work $1,200 completed in Q3 115 112 112 $900 94 $600 $300 $0 2020 2021 2022 2023 Q3 2023 Q4 2023 Production Sales 6
Slide 7: Electricity and Mass Timber
Electricity and Mass Timber Electricity Mass Timber Revenue (US$mm) 254 252 Revenue down due to timing of projects 19 15 Q3 2023 Q4 2023 Sales Volume (GWh) $113 $98 Q3 2023 Q4 2023 MMT has a ~$100 million order book we expect to Q3 2023 Q4 2023 fulfill over coming months Price ($ / MWh) 7
Slide 8: Financial Position
Financial Position Summary Capital Optimization US$mm unless otherwise stated • Initiated sale process of sandalwood business; resulted Measure 2023 Full Year Q3 2023 Q4 2023 Change (+/-) in a ~$34 million non-cash impairment charge affecting Net Income (Loss) ($242) ($26) ($87) ($61) net income Ear
Slide 9: Performance Recap and Outlook
Performance Recap and Outlook Performance Drivers + Positive Capital Expenditure Outlook • Improved pulp pricing in Q4 • Uncertain market outlook • Modest contribution from mass timber business, which resulting in continued tight handle generated positive EBITDA on capex • Targeting between $75 to $
Slide 10: Pulp Markets
Pulp Markets Prices and Supply Demand • Seeing upward pricing pressure in Europe • Demand in Europe and China remains weak and although markets remain weak continues to favour buyers • Lunar New Year holiday in China expectedly • European producers running at reduced rates dampened buying activity,
Slide 11: Pulp Operations
Pulp Operations Past Quarter: Q4 2023 • Mills ran efficiently this quarter, but more scheduled downtime due vs. Q3 (23 days vs. 13 days) • No unplanned downtime / curtailments in Q4 compared to Q3 Looking Ahead: 2024 • A normal major maintenance year is expected with Celgar moving to an 18-month maj
Slide 12: Lumber Markets
Lumber Markets • Q4 2023 results reflect improved lumber and mass timber results • High interest rates continue to weigh on housing starts, but improvements expected as the spring building season begins Mid-Term Drivers of Positive Supply-Demand Dynamics Low Lumber Sawmill Low Housing Recent Canadia
Slide 13: Growing Spectrum of Products
Growing Spectrum of Products Pallets & • The integration of Torgau continues to progress well, but shipping pallet markets remain Pellets weak • Warm winter weather reduced demand and price of pellets in Q4 • Pallet prices expected to normalize once European economy shows signs of recovery Mass Timb
Slide 14: Fibre Costs
Fibre Costs Fibre Costs Constant for Pulp; Down for Lumber Per Unit Fibre Costs Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Pulp Solid Wood 14
Slide 15: Bioproducts for a More Sustainable World
Bioproducts for a More Sustainable World Lignin Extraction Plant • New lignin extraction plant at Rosenthal continues Sustainable Fuel Substitutes to ramp-up as planned • Aligned with strategy to expand into green Potential demand is very significant chemicals and other circular economy-compatible
Slide 16: Contact Information
Contact Mercer International Inc. Information P: +1 (604) 684 1099 info@mercerint.com Suite 1120, 700 West Pender St Vancouver, B.C. Canada www.mercerint.com V6C 1G8
Slide 17: Reconciling Net Income (Loss) to EBITDA
Reconciling Net Income (Loss) to EBITDA Consolidated (US$ millions) Q3 2023 Q4 2023 Net Income (Loss) Attributable to Common Shareholders ($26.0) ($87.2) Income tax provision (recovery) 4.0 1.1 Interest expense 21.9 27.2 Other income (3.3) 2.5 Operating income (loss) (3.4) (56.4) Add: Depreciation a
Slide 18: Reconciling Net Income (Loss) to EBITDA
Reconciling Net Income (Loss) to EBITDA Note: For other reconciliations of Net Income (Loss) to Operating EBITDA in periods not shown, please refer to that period’s respective Form 10-Q or 10-K, which can be found on our website (www.mercerint.com) Operating EBITDA is defined as operating income (lo