Mercer International Inc. · NASDAQ:MERC
Mercer International — Investor Presentation (November 2013)
27 slides from Mercer International's investor presentation, Nov 5, 2013
Slide 1: Investor Discussion Materials November 2013
Investor Discussion Materials November 2013
Slide 2: Forward Looking Statements
Forward Looking Statements The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this presentation contains statements that are forward-looking, such as statements relating to results of operations and financial
Slide 3: Mercer International Inc.
Mercer International Inc. NASDAQ:MERC | TSX:MRI.U | www.mercerint.com
Slide 4: Mercer - A Snapshot
Mercer - A Snapshot World-class, large, modern mill operations that produce high-quality NBSK pulp Strategically located mills, close to excellent fiber baskets and key markets Strong long-term forecast and supply-demand outlook for NBSK Significant and growing revenue from energy and chemical sales
Slide 5: Corporate Structure
Corporate Structure Pursuant to the terms of its 2017 Senior Notes Mercer conducts operations through three subsidiaries: Rosenthal - Germany Stendal - Germany Celgar - BC, Canada The Corporation is divided into the "Restricted Group" and the "Non-Restricted Group" - a structure created to facilitat
Slide 6: Significant Capacity with Access to Key Global Markets
Significant Capacity with Access to Key Global Markets Mercer's three mills have a combined annual capacity of 1,525,000 air-dried metric tonnes (ADMT) of NBSK pulp production and 259 MW of electrical generation Following the finalization of Stendal's Project Blue Mill (ramp-up started at end of Q3
Slide 7: Growing Energy and Chemical By-Product Revenues
(CHART) Growing Energy and Chemical By-Product Revenues Mercer has been a leader among paper and forest products companies in embracing the "bio-economy" and in harnessing significant value from the generation of surplus power as well as its production of bio-chemicals Mercer recognized the opportun
Slide 8: Mercer's Recent Developments
Mercer's Recent Developments Celgar Workforce Reduction Expected to improve fixed costs by €6.0 to €7.5 million per year Incurred pre-tax charges of ~€2.9 million for severance and other personnel related expenses in Q3 2013 Estimated additional costs in the range of €1.5 to €3.0 million (pre-tax) i
Slide 9: The NBSK Market
The NBSK Market NASDAQ:MERC | TSX:MRI.U | www.mercerint.com
Slide 10: Introduction to the Major Themes in NBSK
Introduction to the Major Themes in NBSK The impact of digital media on paper demand ? Current themes surrounding the NBSK market include: The effect of China and other emerging economies' continuing growth ? The net supply impact of mill closures, starts/restarts, and facility conversions ? The pot
Slide 11: Putting NBSK's History into Perspective
After undergoing significant changes over the past 20+ years, the market for NBSK is trending from balanced to tight, with the meaningful substitution of NBSK for other pulps largely completed Putting NBSK's History into Perspective (CHART) Shortage! ? price surge Sources: Factset FOEX PIX Pulp NBSK
Slide 12: Changes to NBSK End Use Markets
Source: Brian McClay 2012 (end use) / Hawkins Wright 2012 (total demand) Changes to NBSK End Use Markets (CHART) 7% 60% 15% 18% 5% 33% 25% 37% NBSK's strength attributes make it a necessary input for many of the fast-growing, high-end grades such as specialty, freesheet, and tissue papers Changes to
Slide 13: China's Growing Demand
China's Growing Demand (1) Source: PPPC 2012 (2) 2012E assumes same breakdown of grades as in 2010, for illustrative purposes (CHART) (CHART) P&W Woodfree: 9.9% Paper Board: 9.6% Kraft & Spec.: 11.0% (CHART) Tissue: 14.7% CAGR: 2004 - 2012* Region: '95 - '10 CAGR 2001 2002 2003 2004 2005 2006 2007 2
Slide 14: China's Growing Demand (Continued)
China's Growing Demand (Continued) Source: PPPC - Trends in P&W Papers and Tissues (Emanuele Bono, Nov. 2012) Reasons China's demand is growing rapidly... ... and its pulp supply isn't currently keeping pace (CHART) Over time , the market will easily absorb new tissue capacity Avg 10 Year Growth Rat
Slide 15: NBSK Supply / Demand Summary
NBSK Supply / Demand Summary Demand Fundamentals Supply Fundamentals Demand for NBSK is still growing globally Improving economic conditions for emerging countries Digital substitution Supply growth potential for NBSK is limited NBSK supply increases are limited due to fiber supply and the economics
Slide 16: Mercer Balance Sheet - September 30, 2013
Mercer Balance Sheet - September 30, 2013 in € millions Restricted Unrestricted Adjustments Consolidated ASSETS Cash, Cash Equivalents €75.1 €59.1 - €134.2 Receivables 52.6 44.7 - 97.3 Inventories 68.7 53.9 - 122.6 Other Current Assets 10.2 6.4 - 16.6 Total Current Assets 206.6 164.1 - 370.7 Propert
Slide 17: Mercer Selected Historical Financial Data (Consolidated)
Mercer Selected Historical Financial Data (Consolidated) in millions, except for per share data 2010 2011 2012 Q3-2012 Q3-2013 Pulp Revenue €856.3 €831.4 €761.9 €205.1 €186.1 Energy and Chemical Revenue €49.3 €68.1 €72.3 €18.2 €17.0 Total Revenue €905.6 €899.5 €834.1 €223.3 €203.1 Operating Income (
Slide 18: Significant Earning Potential
Significant Earning Potential China's fiscal tightening combined with weakness in Europe create NBSK trough pricing conditions Prices have been slowly improving from recent lows, and we expect continued improvement (CHART) (CHART) 2009 2010 2011 2012 2013 For a reconciliation of Net Income to Operat
Slide 19: Appendix A Additional Information on Mercer International Inc.
Appendix A Additional Information on Mercer International Inc.
Slide 20: Mercer - Corporate Overview
Mercer - Corporate Overview Mercer owns three large, modern pulp mills - one located in BC, Canada and two in Germany The assets have a combined annual capacity of over 1.5 million ADMT per year of NBSK, a premium grade of pulp with excellent strength properties A significant and growing portion of
Slide 21: History of Mercer's Debt Structure
History of Mercer's Debt Structure
Slide 22: Appendix B Detailed Overview of Operations
Appendix B Detailed Overview of Operations
Slide 23: Rosenthal Mill
Rosenthal Mill (1) 2012 average EUR:USD foreign exchange rate of 1.2860 Mercer International Group: Restricted Group Location: Blankenstein, Germany (~300 km south of Berlin) Pulp Production Capacity: 355,000 ADMT per year Electricity Generating Capacity: 57 MW Certification: ISO 9001, 14001, and 50
Slide 24: Celgar Mill
Celgar Mill Mercer International Group: Restricted Group Location: Castlegar, BC, Canada (~600 km east of Vancouver) Pulp Production Capacity: 520,000 ADMT per year Electricity Generating Capacity: 100 MW Certification: ISO 9001 and ISO 14001 2012 Green Electricity Sales: €13.4 million (US$17.2 mill
Slide 25: Stendal Mill
Stendal Mill Mercer International Group: Unrestricted Group Location: Stendal, Germany (~130 km west of Berlin) Pulp Production Capacity: 650,000 ADMT per year Electricity Generating Capacity: 102 MW Certification: ISO 9001 and ISO 14001 certified 2012 Green Electricity Sales: €32.2 million (US$41.4
Slide 26: Appendix C Reconciliation of Net Income to Operating EBITDA
Appendix C Reconciliation of Net Income to Operating EBITDA
Slide 27: Reconciling Net Income (Loss) to Operating EBITDA
Reconciling Net Income (Loss) to Operating EBITDA Note: For other reconciliations of Net Income (Loss) to Operating EBITDA in periods not shown here, 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 opera
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