Mercer International Inc. · NASDAQ:MERC

Mercer International — Investor Presentation (August 2021)

38 slides from Mercer International's investor presentation, August 2021

  1. Slide 1: Investor Presentation

    Mercer International Inc. Investor Presentation August 2021 # 1

  2. 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

  3. Slide 3: Building a Platform for Growth

    Building a Platform for Growth Rosenthal tall oil plant DMI acquisition Stendal Rebuild of Acquisition Celgar “Green minority Santanol Mercer Rosenthal of Celgar Energy Project” interest buyout acquisition Forestry mill mill Services acquisition 1999 2005 2010 2014 2018 2020 1994 2004 2007 2013 2017

  4. Slide 4: Strategically-Located Assets

    Strategically-Located Assets Peace River Friesau 475,000 ADMT 550,000 Mfbm NBSK/NBHK lumber 13 MW 70 MW energy energy Cariboo Stendal 170,000 ADMT NBSK(1) 660,000 ADMT NBSK 28.5 MW energy(1) 148 MW energy Celgar Rosenthal 520,000 ADMT NBSK 360,000 ADMT NBSK 100 MW energy 57 MW energy Mercer Forestry

  5. Slide 5: Products Sales Mix

    Products Sales Mix(1)(2) Energy / Bio-Extractives U.S. U.S. Lumber Other Other 6% 12% 14% 30% 22% Germany Pulp 29% 20% 58% 79% Germany 29% China Products Pulp Segment Wood Products Segment(3) 1) Q2 2021 LTM by revenue 2) Excludes energy sales from 50% owned Cariboo mill 3) Includes wood residual sal

  6. Slide 6: Mercer's 5-Pillar Strategy

    Mercer’s 5-Pillar Strategy Operate World-class Manage the Integrity Growth and Sustainable Develop Our Talent Assets of our Balance Sheet Diversification where Operations and Liquidity we have Core Competencies Pulp Wood Products Wood Extractives Green Energy 6

  7. Slide 7: Operate World-class Assets

    Operate World-class Assets  Among the largest producers of NBSK in the world  Operating among the most modern NBSK mills in the  Efficient distribution channels to major pulp consuming world markets of Asia, Europe and North America  Low cost and energy efficient Top NBSK Market Pulp Producers b

  8. Slide 8: Operate World-class Assets

    Operate World-class Assets Top 20 Largest Softwood Sawmills (Mfbm)(1)(2) Ilim Wismar Canfor Plateau Canfor Houston  Friesau sawmill is West Fraser Quesnel Mercer Friesau one of the world’s Binderholz Kösching largest sawmills Offner Wolfberg Ilim Landsberg  Unique flexibility to Dunkley Conifex Ma

  9. Slide 9: Operation Optimization

    Operation Optimization Continuous improvement culture drives innovation and process optimization Logistics Innovation:  Design and construction of dedicated trains and truck fleet for shipping wood and end-products  Dedicated ports and breakbulk access for wood, pulp and lumber Construction Expert

  10. Slide 10: 15 Years of Growth and Diversification

    15 Years of Growth and Diversification Steady, growth and diversification into adjacent Consolidated Revenue businesses with expected market demand ($ millions)(1)(2) growth in which we have core competencies: 1,800 Bio-extractives/other 1,600 Wood products  Construction of Stendal NBSK mill in 200

  11. Slide 11: Prudent, Agile Balance Sheet

    Prudent, Agile Balance Sheet Liquidity is managed to the global economic conditions: Debt composition is optimized when opportunistic  2016-2018: Tighter liquidity during stronger economic conditions  Weighted average maturity of senior debt is 2028 and expansion period for Mercer  Weighted avera

  12. Slide 12: Balanced Capital Allocation

    Balanced Capital Allocation Capital allocation is balanced, and consistent with the strategy:  Maintenance of Business(1) capital expenditures to maintain modern, efficient and reliable mills.  Growing the Company through acquisitions and high-return capital expenditures.  Commitment to returning

  13. Slide 13: Sustainable Products

    Sustainable Products Sustainable, biodegradable, recyclable products for a carbon-conscious world:  Kraft pulp from wood residuals and forest waste for the production of recyclable paper, containers, and specialty products  Solid wood products from certified forests for home construction and renov

  14. Slide 14: Sustainable Processes

    Sustainable Processes Modern assets and pulping innovation make our processes sustainable; continuous improvement culture keeps us advancing.  Climate change scenario analysis conducted in 2020  22% reduction in waste material to landfill since 2017  85% of energy comes from renewable biomass  P

  15. Slide 15: Sustainable People Development

    Sustainable People Development 99.4% 2020 Shareholder 40% reduction in safety Growth Opportunities Shared revenues with vote in favour of incident rate since 2015 for our people Indigenous partners Executive Compensation Development and deep 2020 Global Employee Diverse and equitable Global Diversit

  16. Slide 16: Financial Performance

    Financial Performance Annual Operating EBITDA(1)(2) $400 $1,600 1,170 1,345 $350 Operating EBITDA NBSK Prices $1,400 Operating EBITDA(1)(2) remains NBSK Price ($/ADMT) $300 1,030 $1,200 highly influenced by global NBSK 910 933 910 ($ millions) $250 798 $1,000 pricing, however: 810 810 820 $200 $800

  17. Slide 17: Current Market Conditions

    Current Market Conditions Pulp Lumber  Steady demand and falling inventories will improve  We expect US lumber prices to remain at elevated markets over time levels over the next year, supported by rising Demand  Steady mid-term growth from emerging economies, housing starts, low interest rates a

  18. Slide 18: Sustainable, Long-term Growth

    Attractive long-term fundamentals in Sustainable, Long-term key markets Management committed to growth, in spaces where we have clear competencies Prudent and agile balance sheet discipline, commitment to the dividend Growth Commitment to sustainability, our people and our communities; a sound found

  19. Slide 19: 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 19

  20. Slide 20: Reconciling Net Income (Loss) to EBITDA

    Reconciling Net Income (Loss) to EBITDA Q2 2021 Consolidated (US$ millions) 2016 2017 2018(1)(2) 2019(2) 2020(2) LTM(2) Net Income (Loss) Attributable to Common 34.9 70.5 128.6 (9.6) (17.2) 21.9 Shareholders Add: Income Tax Provision (Benefit) 24.5 33.5 48.7 19.2 6.1 13.3 Add: Interest Expense 51.6

  21. 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

  22. Slide 22: Appendix: Market Attributes

    Appendix: Market Attributes Sustainable. By Design. 22

  23. Slide 23: Global Wood Fibre Market

    Global Wood Fibre Market ▪ The global demand for wood fibre is principally met by the recycling of packaging and graphics paper ▪ Today, NBSK makes up 3.5% of global fibre demand; it has become a highly specialized niche product used for strength and bonding attributes. It is principally produced in

  24. Slide 24: Global Wood Fibre Market

    Global Wood Fibre Market(1) Total global fiber consumption – 418 million tonnes Recovered paper – 56% Virgin pulp – 44% Total virgin pulp market – 184 million tonnes Integrated pulp – 65% Market pulp – 35% Total market pulp market – 64 million tonnes UBK, Hardwood – 41% Radiata, SBSK NBSK – 23% Mech

  25. Slide 25: Global Bleached Kraft Pulp Market

    Global Bleached Kraft Pulp Market(1) Global Bleached Kraft Pulp Demand Global Bleached Kraft Pulp Demand (millions of tonnes) (millions of tonnes) 75.0 37.5 62.6 64.1 59.8 60.1 61.1 59.0 33.7 33.5 34.3 60.0 30.0 26.2 25.6 25.8 45.0 22.5 China China China China China China 30.0 15.0 15.0 7.5 - - 2019

  26. Slide 26: NBSK Demand Drivers

    NBSK Demand Drivers 28.0 Global BSK Demand by Region(1) 40% Region 2000 – 2025E CAGR China 9.6% 21.0 30% NBSK Demand Changes millions of tonnes % China of Total W. Europe  Increased NBSK demand for tissue and specialty (1.8%) 14.0 20% products continues to rise globally N. America  In developing c

  27. Slide 27: Variable Market Conditions

    Variable Market Conditions NBSK Price & BSK Global Inventory $1,650 49 $1,500 NBSK Price (USD / tonne) 42 Global NBSK Inventory (# Days) $1,350 35 $1,200 $1,050 28 $900 21 $750 14 $600 $450 7 $300 - 2004 2006 2008 2010 2012 2014 2016 2018 2020 BSK Global Inventory NBSK List Price to N. Europe NBSK L

  28. Slide 28: Pulp Capacity Changes

    Pulp Capacity Changes NBSK Hardwood SBSK, Fluff, Radiata  After a period of considerable capacity  Eucalyptus capacity is set to grow over 4  Continuation of a trend by some producers to expansion in Scandinavia form 2016-2018, million tonnes in the next few years exit these softwood grades in fa

  29. Slide 29: US Lumber Market – Demand Drivers

    US Lumber Market – Demand Drivers(1)  Housing starts are rising and still well below  Interest (mortgage) rates are currently historical average prior to the financial crisis supporting new home ownership and upgrading US Housing Starts (million units) Interest Rates (%) 2.0 18 Single Multi Mobile

  30. Slide 30: US Lumber Market – Demand Drivers

    US Lumber Market – Demand Drivers(1)  The prime first time home ownership  Production capacity is growing but is demographic (30-35 year olds) is its experiencing restrictions; particularly from currently highest in a generation Canada where allowable cut levels are falling US Population by Age (i

  31. Slide 31: Appendix: Operations Overview

    Appendix: Operations Overview Sustainable. By Design. 31

  32. Slide 32: Mercer Rosenthal

    Mercer Rosenthal  Location: Blankenstein, Germany (~300 km south of Berlin)  Pulp production capacity: 360,000 tonnes per year NBSK  Electricity generating capacity: 57 MW Mercer Rosenthal  Certification: ISO 9001, 14001, and 50001  2020 green electricity sales: $16.1 million  2020 bio-extract

  33. Slide 33: Mercer Stendal

    Mercer Stendal  Location: Stendal, Germany (~130 km west of Berlin) Mercer Stendal  Pulp production capacity: 660,000 tonnes per year NBSK  Electricity generating capacity: 148 MW  Certification: ISO 9001, 14001, and 50001  2020 green electricity sales: $51.3 million  2020 bio-extractives sale

  34. Slide 34: Mercer Celgar

    Mercer Celgar  Location: Castlegar, BC, Canada (~600 km east of Vancouver)  Pulp production capacity: 520,000 tonnes per year NBSK  Electricity generating capacity: 100 MW  Certification: ISO 9001 and 14001  2020 green electricity sales: $10.9 million  2020 bio-extractives sales: $0.06 million

  35. Slide 35: Mercer Peace River

    Mercer Peace River  Location: Peace River, Alberta (~500 km northwest of Edmonton)  Pulp production capacity: 475,000 tonnes per year NBSK/NBHK  Electricity generating capacity: 65 MW  Certification: ISO 9001 and ISO 14001  2020 green electricity sales: $5.2 million Key Features:  Modern, high

  36. Slide 36: Cariboo Pulp & Paper

    Cariboo Pulp & Paper  Location: Quesnel, British Columbia (~650 km north of Vancouver)  Pulp production capacity: 170,000 tonnes per year(1) NBSK  Electricity generating capacity: 28.5 MW(1)  Certification: ISO 9001 and ISO 14001  2020 green electricity sales: $5.4 million(2) Key Features:  50

  37. Slide 37: Mercer Timber Products (Friesau)

    Mercer Timber Products (Friesau)  Location: Friesau, Germany (~300 km south of Berlin)  Lumber production capacity: 550,000 Mfbm  Energy generating capacity: 49.5 MW (13 MW electricity)  2020 lumber sales: $180.8 million  2020 wood residuals sales: $6.3 million  2020 green electricity sales: $

  38. Slide 38: 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 38

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