Mercer International Inc. · NASDAQ:MERC
Mercer International — Q2 2024 Earnings Presentation
19 slides from Mercer International's earnings presentation, Aug 9, 2024
Slide 1: Mercer International Inc. Q2 2024 Earnings Call
Mercer International Inc. Transforming biomass into bioproducts for a more sustainable world Q2 2024 Earnings Call August 9, 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 Lower EBITDA Driven by Planned Maintenance Downtime Highlights Change • Quarter-over-quarter EBITDA EBITDA (US$ millions) Q1 2024 Q2 2024 decrease driven by 37 days of planned (+/-) maintenance downtime • After adjusting for planned maintenance Pulp Segment $68 $32 ($37) d
Slide 4: Pulp Segment: Pulp Prices
Pulp Segment Pulp Prices Pricing Overview Continued Recovery in Both NBSK and NBHK Prices Realized Pulp Price (US$ / tonne) Region Q1 2024 Q2 2024 NBSK List Price (US$ / tonne) $1,000 Domestic $1,440 $1,697 $800 China (net) $745 $811 $600 Europe $1,400 $1,602 NBHK List Price (US$ / tonne) $400 Domes
Slide 5: Pulp Segment: Key Performance Indicators
Pulp Segment Key Performance Indicators Production Volume (000s tonnes) Mill Planned Downtime (Days) 539 539 487 422 44 7 Q1 2024 Q2 2024 Production (Actual) Production (Adjusted) (1) Sales Volume (000s tonnes) 37 566 No planned 433 maintenance downtime - Q1 2024 Q2 2024 Planned Start-up Q1 2024 Q2
Slide 6: Solid Wood Segment: Lumber Overview
Solid Wood Segment Lumber Overview Benchmark Lumber Price Lumber Operations (mmfbm) Random Lengths WSPF 2&btr 2x4 (US$ / mfbm) $1,500 $1,200 127 121 117 111 $900 $600 $300 $0 2020 2021 2022 2023 2024 Q1 2024 Q2 2024 Production Sales 6
Slide 7: Electricity and Mass Timber
Electricity and Mass Timber Electricity Mass Timber Production (000s m3) 259 219 11 7 Q1 2024 Q2 2024 Sales Volume (GWh) $94 $91 Q1 2024 Q2 2024 54% increase from Q1 2024 due to timing of mass Q1 2024 Q2 2024 timber projects Price ($ / MWh) 7
Slide 8: Financial Position
Financial Position Summary Highlights US$mm unless otherwise stated • Recorded a non-cash goodwill impairment at Torgau of $34 Measure Q1 2024 Q2 2024 Change (+/-) million or $0.51 / share related to ongoing weakness in the Net Income (Loss) ($17) ($68) ($51) European lumber, pallet and biofuels mar
Slide 9: Performance Recap and Capital Expenditures
Performance Recap and Capital Expenditures Performance Drivers + Positive Capital Expenditure Summary • Operating results positively impacted by improved pulp • Total Q2 capex of ~$18 million pricing and lower energy costs • Recall, capex budget for 2024 • Strong performance from mass timber segment
Slide 10: Pulp Markets
Pulp Markets Prices and Supply Demand • Tight supply exacerbated by permanent closures • European and North American markets showed of NBSK mills, Finnish transport strike and the most improvement unplanned downtime at Kemi • Strong demand from European paper and tissue • Canadian railway union labo
Slide 11: Pulp Operations
Pulp Operations Past Quarter: Q2 2024 • Lower production compared to Q1 due to planned maintenance downtime (no planned downtime days in Q1) and divestment of Cariboo mill at end of Q1 Looking Ahead • Celgar has moved to an 18-month major planned maintenance schedule • The expected maintenance sched
Slide 12: Lumber Markets
Lumber Markets • European lumber market was up slightly in Q2 while US market weakened • High interest rates continue to weigh on housing starts and construction around the world • Prices in Q3 are expected to remain flat; potential for short-term upside due to recently announced lumber curtailments
Slide 13: Growing Spectrum of Products
Growing Spectrum of Products Pallets & • Shipping pallet markets remain weak due to overall weak European economy, but slight price Pellets increase felt in Q2 • Pallet prices expected to normalize once European economy shows signs of recovery • Lower heating pellet prices in Q2 due to expected seas
Slide 14: High-Return Capex Projects
High-Return Capex Projects With improving market conditions, strategic and high-return capex projects at our Torgau and Spokane mills have been restarted • Project focuses on woodyard and log infeed • Project focuses on wood infeed and sorting systems to increase production of high-quality process a
Slide 15: Fiber Costs
Fiber Costs Fiber Costs Relatively Flat for Both Pulp and Lumber Per Unit Fiber Costs Steady German sawmill chips, Peace River woodroom and Celgar wood strategy kept pulp fiber costs in check Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Pulp (US$ / ADMT) Lumber (US$ / m3) Looking ahead, w
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; entering into partnerships to support future commercialization of lignin • Aligned with strategy to expand into green chemicals and other circular economy-comp
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 Operating EBITDA
Reconciling Net Income (Loss) to Operating EBITDA Consolidated (US$ millions) Q1 2024 Q2 2024 Net Income (Loss) ($16.7) ($67.6) Income tax provision (recovery) (6.4) 1.3 Interest expense 27.6 26.8 Other income (4.9) (4.3) Operating income (loss) (0.4) (43.8) Add: Depreciation and amortization 40.4 3
Slide 19: 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, 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