Mercer International Inc. · NASDAQ:MERC
Mercer International — Q2 2025 Earnings Presentation
25 slides from Mercer International's earnings presentation, Aug 1, 2025
Slide 1: Mercer International Inc. Q2 2025 Earnings Call
Mercer International Inc. Transforming biomass into bioproducts for a more sustainable world Q2 2025 Earnings Call August 1, 2025 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 Decreased Quarter-Over-Quarter Key Drivers Change • EBITDA decreased quarter-over-quarter EBITDA (US$ millions) Q1 2025 Q2 2025 due to: (+/-) • Negative FX impact from a weaker Pulp Segment(1) $50 ($10) ($60) U.S. dollar primarily on EUR and CAD denominated expenses
Slide 4: Pulp Prices
Pulp Segment Pulp Prices Pricing Overview NBSK Realized Prices Decreased in Q2 Realized Pulp Price (US$ / tonne) Region Q1 2025 Q2 2025 NBSK List Price (US$ / tonne) $1,000 Domestic $1,753 $1,820 $800 China (net) $793 $734 Europe $1,550 $1,553 $600 NBHK List Price (US$ / tonne) $400 Domestic $1,268
Slide 5: Pulp Segment Key Performance Indicators
Pulp Segment Key Performance Indicators Sales Volume (000s tonnes) Major Maintenance Downtime (Days) 478 Q3 2025: 427 • 14 days (Rosenthal) • 4 days (Celgar) Q1 2025 Q2 2025 6 Production Volume (000s tonnes) 459 489 457 490 23 22 Q1 2025 Q2 2025 Q1 2025 Q2 2025 Planned Start-up Production (Actual) P
Slide 6: Lumber Overview
Solid Wood Segment Lumber Overview Benchmark Lumber Price Lumber Operations (mmfbm) Random Lengths WSPF 2&btr 2x4 (US$ / mfbm) $1,500 128 131 $1,200 120 121 $900 $600 $300 - 2021 2022 2023 2024 2025 Q1 2025 Q2 2025 Production Sales 6
Slide 7: Electricity and Mass Timber
Electricity and Mass Timber Electricity Mass Timber Revenue (US$mm) 235 $17 216 $11 Q1 2025 Q2 2025 Sales Volume (GWh) $112 $90 Q1 2025 Q2 2025 Lower Q2 mass timber revenues due to prevailing Q1 2025 Q2 2025 high-interest rate environment, which is impacting Price ($ / MWh) project timelines and mar
Slide 8: Financial Position
Financial Position Summary One Goal, One Hundred US$mm unless otherwise stated • Goal to improve profitability by $100 million by the end of Measure Q1 2025 Q2 2025 Change (+/-) 2026, using 2024 as a baseline • $5 million in cost savings Net Loss ($22) ($86) ($64) realized to date; $25 million antic
Slide 9: Strategic Focus: One Goal, One Hundred
Strategic Focus: One Goal, One Hundred • Targeting $100 million in EBITDA improvements by the end of 2026 compared to 2024 • $5 million in savings achieved in Q2 with additional $20 million identified for 2025. $100 million • Targeting ~$20 million reduction in working capital and ~$20 million reduc
Slide 10: Trade Uncertainty
Trade Uncertainty Tariff Exposure and Impacts Quarterly Dividend Temporarily • Pulp and mass timber imports from Canada are currently not subject to tariffs Suspended in Q2 • Lumber from Germany also do not have tariffs applied but under a Section 232 review Amidst economic uncertainty, • Wood chips
Slide 11: Macroeconomic Headwinds
Macroeconomic Headwinds ($21MM) EBITDA Heavy maintenance Impact of market Unclear global quarter, including 6 uncertainty, including trade landscape days of slow start-up for weakening U.S. dollar Celgar and pulp pricing In face of global trade uncertainties, continue to maintain open dialogue wit
Slide 12: Pulp Markets
Pulp Markets NBSK NBHK • Softwood pricing expected to remain weak • Hardwood pricing weakened in China due to weak through summer months paper demand and increased domestic pulp supply • Steady demand for softwood in mid-term, combined with reduced supply, will create • Pricing in North America resi
Slide 13: Lumber Production
Lumber Production Quarterly Lumber Production (mmfbm) (6%) 6% decrease in lumber production compared to Q1 due to planned maintenance at Friesau 128 120 Expected incremental lumber production at Torgau will provide ~65 million board feet of annual lumber capacity Q1 2025 Q2 2025 13
Slide 14: Fiber Costs
Fiber Costs Fiber Costs Increased for Pulp and Lumber Per Unit Fiber Costs Overall pulp fibre costs were up slightly relative to Q1. In Germany, increased demand for sawlogs inflated fibre costs. In Canada, costs increased due to higher logistics costs. Q2 '23 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '
Slide 15: Solid Wood Segment
Solid Wood Segment • Despite challenging European economic backdrop and impact of high interest rates on the construction industry, U.S. lumber market saw some modest price improvements • Negative $5 million EBITDA in Q2 for solid wood segment primarily due to sustained weak demand for pallets • Ant
Slide 16: Lumber Markets
Lumber Markets • Expect U.S. lumber pricing to be volatile in the short term due to economic forces affecting the construction industry • In contrast, European lumber prices trending upwards, driven by increasing saw log prices • Long-term price improvement in both markets reliant on economic recove
Slide 17: Pallets & Pellets
Pallets & Pellets Pallet Pellet • Shipping pallet market remains weak due to • Heating pellet prices up in Q2, driven from higher overhang of European economy (especially German fiber costs which created supply concerns Germany) • Expect demand and prices to be slightly lower in • Once signs of econ
Slide 18: Mass Timber
Mass Timber • Steady growth in incoming project inquiries for the mass timber business, with potential sales volumes exceeding $400 million and over 100 projects per quarter • Order book is growing, with projects being bid on and won today scheduled for construction nine months from now, well into 2
Slide 19: Pulp Operations
Pulp Operations 2025 Major Maintenance Shut Q1: Q2: Q3: Q4: Celgar (22 days) Peace River (20 days) Rosenthal (14 days) Stendal (18 days) Stendal (3 days) Celgar (4 days) Total downtime of 81 days vs. 57 days in 2024 as Celgar did not take a major shut in 2024 19
Slide 20: Capital Allocation
Capital Allocation Strategic and high-return capital projects at Torgau and Celgar mills are underway / recently completed Capital Expenditure Summary • Total Q2 capex of ~$24 million • Expected 2025 capex of ~$100 million (reduction of $20 million from previous targets) • Project will increase sawn
Slide 21: Bioproducts for a More Sustainable World
Bioproducts for a More Sustainable World Carbon Capture Plant • Currently in FEL-2 stage of assessing the installation of a carbon capture plant. • Exciting opportunity to enter the voluntary carbon credit market We believe products like lignin, mass timber, green energy, lumber, and pulp will play
Slide 22: 2025 Outlook
2025 Outlook • Amidst a challenging global trade environment, focused on building resilience • Businesses have strong fundamentals and when combined with debt reduction strategy, will create significant shareholder value • Committed to strengthening our businesses through the "One Goal, One Hundred"
Slide 23: Contact Information
Contact Mercer International Inc. Information P: +1 (604) 684 1099 info@mercerint.com Suite 1120, 700 West Pender St Vancouver, B.C. Canada www.mercerint.com V6C 1G8
Slide 24: Reconciling Net Loss to Operating EBITDA
Reconciling Net Loss to Operating EBITDA Consolidated (US$ millions) Q1 2025 Q2 2025 Net loss ($22.3) ($86.1) Income tax provision (recovery) 0.7 ($1.9) Interest expense 28.2 28.4 Other expense 0.2 1.1 Operating income (loss) 6.7 (58.4) Add: Depreciation and amortization 40.2 37.4 Operating EBITDA 4
Slide 25: Reconciling Net Loss to Operating EBITDA
Reconciling Net Loss to Operating EBITDA Note: For other reconciliations of Net 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 (loss) plus