Mercer International Inc. · NASDAQ:MERC
Mercer International — Q1 2024 Earnings Presentation
19 slides from Mercer International's earnings presentation, May 10, 2024
Slide 1: Mercer International Inc. Q1 2024 Earnings Call
Mercer International Inc. Transforming biomass into bioproducts for a more sustainable world Q1 2024 Earnings Call May 10, 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 Materially Improved vs. Q4 2023 Highlights Change • Quarter-over-quarter EBITDA EBITDA (US$ millions) Q4 2023 Q1 2024 increase driven by no major maintenance (+/-) downtime, improving pulp sales realizations, and lower fibre / production Pulp Segment $32 $68 $36 cos
Slide 4: Pulp Prices
Pulp Segment Pulp Prices Pricing Overview Strong Recovery in Both NBSK and NBHK since Q3 2023 Realized Pulp Price (US$ / tonne) Region Q4 2023 Q1 2024 NBSK List Price (US$ / tonne) $1,000 Domestic $1,312 $1,440 $800 China (net) $748 $745 $600 Europe $1,245 $1,400 NBHK List Price (US$ / tonne) $400 D
Slide 5: Pulp Segment Key Performance Indicators
Pulp Segment Key Performance Indicators Production Volume (000s tonnes) Mill Downtime (Days) 508 539 539 539 No scheduled Q4 2023 Q1 2024 maintenance led to Production (Actual) Production (Adjusted) (1) a ~$23 million 23 EBITDA increase vs previous quarter Sales Volume (000s tonnes) 566 No major mai
Slide 6: Lumber Overview
Solid Wood Segment Lumber Overview Benchmark Lumber Price Lumber Operations (mmfbm) Random Lengths WSPF 2&btr 2x4 (US$ / mfbm) $1,500 Near record lumber production $1,200 127 121 112 112 $900 $600 $300 $0 2020 2021 2022 2023 2024 Q4 2023 Q1 2024 Production Sales 6
Slide 7: Electricity and Mass Timber
Electricity and Mass Timber Electricity Mass Timber Production (000s m3) 252 259 Decrease driven by minor customer delays for certain large-scale projects; 10 projects now underway 7 Q4 2023 Q1 2024 Sales Volume (GWh) Lower spot prices in Germany $98 $94 Q4 2023 Q1 2024 Mercer Mass Timber has a heal
Slide 8: Financial Position
Financial Position Summary Highlights US$mm unless otherwise stated • Dissolution of the Cariboo mill joint venture in Q1 2024; Measure Q4 2023 Q1 2024 Change (+/-) nominal impact expected on 2024 EBITDA Net Income (Loss) ($87) ($17) $70 – Non-cash loss of ~$24 million (~$0.35 / share) from Earnings
Slide 9: Performance Recap and Capital Expenditures
Performance Recap and Capital Expenditures Performance Drivers + Positive Capital Expenditure Summary • Significant improvement over Q4, driven by improved pulp • Total Q1 capex of ~$18.5 million prices and no major maintenance outages • Capex budget for 2024 increased • Lower input costs (fibre, en
Slide 10: Pulp Markets
Pulp Markets Prices and Supply Demand • Pulp pricing has significantly improved • Strong demand from Europe primarily driven by throughout Q1 2024 merchant de-stocking and logistical challenges of Chinese imports • Tight supply driven by: • Demand increases also felt in North America – Permanent NBS
Slide 11: Pulp Operations
Pulp Operations Past Quarter: Q1 2024 • Mills ran at near record levels; no major downtime (compared to 23 days Q4 2023) Looking Ahead: 2024 • A normal major maintenance year with Celgar having moved to an 18-month major maintenance schedule • The expected maintenance schedule is as follows: Q1 (Act
Slide 12: Lumber Markets
Lumber Markets • Q1 2024 solid wood segment results saw slight improvement over Q4 2023 • US and European lumber markets up slightly, but high interest rates continue to weigh on housing starts and construction • Potential short-term pricing upside from lumber production curtailments or realization
Slide 13: Growing Spectrum of Products
Growing Spectrum of Products Pallets & • Shipping pallet markets remain weak due to overall weak European economy Pellets • Pallet prices expected to normalize once European economy shows signs of recovery • Lower heating pellet prices in Q1 due to expected seasonality Mass Timber • Strong customer
Slide 14: High-Return Capex Projects
High-Return Capex Projects With improving market conditions, we are restarting strategic and high-return capex projects at our Torgau and Spokane mills • Project focuses on woodyard and log infeed • Project focuses on wood infeed and sorting systems to increase production of high-quality process at
Slide 15: Fibre Costs
Fibre Costs Fibre Costs Slightly Down for Pulp; Up for Lumber Per Unit Fibre Costs Steady German sawmill chips, Peace River woodroom, and Celgar wood strategy pushed pulp fibre costs down in Q1 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Pulp (US$ / ADMT) Solid Wood (US$ / m3) Looking ah
Slide 16: Bioproducts for a More Sustainable World
Bioproducts for a More Sustainable World Lignin Extraction Plant • New lignin extraction plant at Rosenthal continues to ramp-up as planned • Aligned with strategy to expand into green chemicals and other circular economy-compatible products • Reinforces commitment to 2030 carbon reduction targets W
Slide 17: 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 18: Reconciling Net Income (Loss) to EBITDA
Reconciling Net Income (Loss) to EBITDA Consolidated (US$ millions) Q4 2023 Q1 2024 Net Income (Loss) Attributable to Common Shareholders ($87.2) ($16.7) Income tax provision (recovery) 1.1 (6.4) Interest expense 27.2 27.6 Other income 2.5 (4.9) Operating income (loss) (56.4) (0.4) Add: Depreciation
Slide 19: 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