Mercer International Inc. · NASDAQ:MERC
Mercer International — BofA Securities 2023 Leveraged Finance Conference
22 slides from Mercer International's conference presentation, November 2023
Slide 1: BofA Securities 2023 Leveraged Finance Conference
Mercer International Inc. Transforming biomass into bioproducts for a more sustainable world BofA Securities 2023 Leveraged Finance Conference November, 2023 Richard Short, CFO and Secretary 1
Slide 2: Forward-looking Statements
Forward-looking Statements The Private Securities Litigation Reform Act of 1995 provides a “safe For more information regarding these harbor” for forward-looking statements. risks and uncertainties, review Mercer’s filings with the United States Securities and Exchange Commission. Certain informatio
Slide 3: Bioproducts: Part of the Solution
Bioproducts: Part of the Solution The tolerance for carbon-intensive products is rapidly waning. Sustainably sourced wood and wood derivatives are part of the solution. However, wood supply is precious; only the most efficient and innovative producers and products will be capable of meeting demand.
Slide 4: Transforming biomass into bioproducts for a more sustainable world
Transforming biomass into bioproducts for a more sustainable world Be Safe & Be Be Be Healthy. Sustainable. Respectful. Bold.
Slide 5: Global Megatrends Driving Long-Term Demand
Global Megatrends Driving Long-Term Demand Growing Population Middle Class By 2030, Increasing Growth worldwide Higher Consumption population is Living Global Megatrends Standards projected to reach 8.3 billion, with Increasing Housing Urbanization Demographics 4.9 billion Changing classified as Reg
Slide 6: Maximizing Value through Purposeful Diversification
LUMBER TALL OIL Maximizing TURPENTINE Value through MASS TIMBER LIGNIN Purposeful Diversification PALLETS GREEN ENERGY PULP BIOFUELS 6
Slide 7: Evolving Sales Mix
Evolving Sales Mix Pulp Segment(1) Consolidated Revenue ($ millions)(1)(2) China 2,500 11% Bio-extractives/Other Germany 34% North America Solid Wood 26% 2,000 Product Mix(1)(2) Other Green Electricity Specialty Paper 29% 1,500 22% Pulp 7% Solid Wood Segment(3) 1,000 71% 17% Germany 500 Pulp 52% US
Slide 8: Leveraging Geographic Clusters to Maximize Value
Residual fiber for pulp Leveraging Geographic Sawdust for pallet components and biofuels Clusters to Maximize Value Unplaned lumber for further processing Low quality lumber for pallets Mercer Rosenthal Mercer Stendal Mercer Stendal Mercer Torgau Mercer Friesau Mercer Rosenthal Mercer Friesau Mercer
Slide 9: Pulp: Continued Optimization
Pulp: 2.3 3rd NBSK/NBHK 475K ADMT Largest Continued million Producer of Market Optimization NBSK 1,790K ADMT ADMT NBSK 2,500 Capacity Additions (000s ADMT) +1,935K 2,000 tonnes 1994 – 2022 1,500 Greenfield Investments +552K tonnes 1,000 Efficiency and Capacity Investments +398K tonnes 500 Aquisition
Slide 10: Solid Wood: Lumber Continued Expansion to Capture Synergies
Solid Wood: 960 Lumber Sales Expansive range Revenue by Region of metric and US (% of Revenue) dimension grades MMfbm for all major 7% world markets Continued 13% Lumber 7% 24% Mercer Friesau Mercer Torgau Expansion to Capture Top No. Synergies 29% 55% 5 1Largest EPAL Largest softwood sawmill pallet
Slide 11: Mass Timber: Continued Geographic Expansion
35% 45,000 m3 Glulam North Mass Timber: America’s 210,000 m3 CLT Leading of North American Mass Timber Mass Timber Panel Continued 5 NA Facilities with Wide Capacity (1) Geographic Reach Producer Geographic 2 State of the Art Global CLT Market Value(2) Facilities in Northwest ($US Billions) Expansio
Slide 12: Bioenergy & Biomaterials: Development of Green Alternatives
Green Electricity Our mills generate 890 GWh of surplus power from Bioenergy & biomass each year, enough to power Biomaterials: 83,700 homes without fossil fuels Refined Lignin Mercer Lignin Development of Resin adhesives Functional fillers Center Completed Green Fossil-Fuel Advanced battery element
Slide 13: Sustained Growth and Diversification
Sustained Growth and Diversification KRAFT PULP 2.3 million ADMT 100% Capacity Growth 1994 Mercer Rosenthal (% of Q3 2023 Capacity) BIOENERGY 431.5 MW 2004 Mercer Celgar LUMBER 75% 2005 Mercer Stendal 960 MMfbm 2017 Mercer Friesau CLT + GLULAM 255,000 m3 Mercer 50% 2018 Peace River Mercer PELLETS +
Slide 14: Balanced Capital Allocation
Balanced Capital Allocation Capital Allocation 2017 – 2022 ($ millions) 1) Maintenance of Business is a term broadly referencing the base capital required to continuously use facilities and equipment, in their designed capacity and efficiency, for their intended purpose 14
Slide 15: Prudent, Agile Balance Sheet
Prudent, Agile Balance Sheet Liquidity is Managed to Global Economic Conditions Debt Composition Optimized when Opportunistic(2) Liquidity(1) • Weighted average maturity: 2028 • Weighted average coupon: 6.33% $800 • Debt rating: B+ (S&P); Ba3 (Moody’s) 695 696 638 648 • Liquidity (September 2023): $
Slide 16: Fit for Future
Fit for Future Environmental and Social Responsibility SBTi Validated UN Global ESG-Linked Fit for Future Targets Compact Loan 2022 2022 Annual Sustainability Five-year €370 million Report highlights our Validated 35% reduction Alignment with a revolving credit facility commitment to becoming an tar
Slide 17: Financial Performance
Financial Performance Annual Operating EBITDA(1)(2) (9) $600 Operating EBITDA NBSK Prices ($/ADMT)(8) Lumber Prices ($/m3) $1,500 $1,150 $500 Price ($/ADMT) $537 ($ millions) $400 $479 $1,000 $300 $365 $393 $200 $254 $500 $187 $210 $193 $100 $92 - - 2016 2017 2018 2019 2020 2021 2022 LTM Q3 2023 Net
Slide 18: Current Market Conditions
Current Market Conditions(1) We believe pulp prices have hit their floor and there may be a long, sustained recovery over multiple quarters. Chinese stimulus, falling inventories and recovery in Europe will eventually create positive Softwood conditions for price increases. Additionally, the lack of
Slide 19: Future Growth Engines
Investment Highlights Pulp: Continuous optimization of our History of current asset base Future Growth Engines Sustained Growth Prudent financial Lumber: Continued expansion to management capture synergies Strategic purposeful diversification focused on synergistic biomass operations that Mass Timbe
Slide 20: Reconciling Net Income (Loss) to EBITDA
Reconciling Net Income (Loss) to EBITDA LTM Consolidated (US$ millions) 2018(1)(2) 2019(2) 2020(2) 2021(2) 2022(2)(3) Q3 2023(2)(3)(4) Net Income (Loss) Attributable to Common 128.6 (9.6) (17.2) 171.0 247.0 (165.4) Shareholders Add: Income Tax Provision 48.7 19.2 6.1 89.6 98.3 (25.6) Add: Interest E
Slide 21: 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
Slide 22: 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 22
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