Mercer International Inc. · NASDAQ:MERC
Mercer International — Investor Presentation (June 2017)
26 slides from Mercer International's investor presentation, Jun 6, 2017
Slide 1: Exhibit 99.1
Exhibit 99.1
Slide 2: Forward-looking statements
MERCER 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 conditions and busin
Slide 3: Operations
Operations Rosenthal - Germany 360,000 tonnes NBSK 57 MW electricity $1 MM bio-chemicals Stendal - Germany 660,000 tonnes NBSK 148 MW electricity $11 MM bio-chemicals Celgar - BC, Canada 520,000 tonnes NBSK 100 MW electricity Friesau - Germany 465,000 Mfbm lumber 13 MW electricity British Columbia V
Slide 4: Modern, low-cost NBSK facilities among the largest in the world
Mercer Metsä Fibre International Paper (Ilim) Stora Enso Södra Cell Catalyst West Fraser SCA Canfor Pulp Resolute UPM Domtar Aditya Birla Average market pulp capacity per mill: 293,129 tonnes Average technical age: 29.4 years Daishowa-Marubeni Mondi Billerud-Korsnas Heinzel APP (Paper Excellence) Na
Slide 5: Bio-refinery strategy
CAGR: 3.9% CAGR: 7.1% CAGR: 4.3% Bio-refinery strategy We are a leader among forest products manufacturers in pursuing a full bio-refinery strategy We harness value from all aspects of the biomass we process by generating electricity and chemicals The market continues to turn to carbon-neutral and r
Slide 6: NBSK – Market primer
NBSK characteristics compared to other pulps long fiber length yielding high tensile strength high fiber diameter yielding good bonding surface low cell wall thickness yielding high flexibility Key end uses tissue specialties Northern Bleached Softwood Kraft (“NBSK”) is produced from spruce, pine, f
Slide 7: NBSK Demand Changes
NBSK Demand Changes Increased NBSK demand for tissue / specialty products continues to rise in developing economies and… In developing countries, demand for NBSK across all end uses is growing Increasing income levels, rapid urbanization of populations and rising living standards are creating strong
Slide 8: China is the leader of demand growth of developing economies
China is the leader of demand growth of developing economies NBSK demand growth in China has averaged 11.9% between 2010 and 2015 on a compound basis(1) Growth is propelled by higher living standards which is driving growth across all end uses; but is most pronounced in high NBSK-containing tissue a
Slide 9: NBSK – capacity changes and pulp price trends
(1) Source: Hawkins Wright (April 2017) Pulp Price Trends Pulp price changes in the past were more heavily influenced by global economic conditions than capacity additions (1) Source: Hawkins Wright (May 3, 2017, prepared for Mercer International) NBSK –capacity changes SBSK/ Fluff / Radiata market
Slide 10: NBSK – pricing trend
Most NBSK is produced in Euro and Canadian dollar zones, so the US dollar NBSK price can be influenced by changing exchange rates, as was the case in 2015 NBSK was until the early 2000’s the global benchmark pulp grade used in most paper applications. With the introduction of southern eucalyptus har
Slide 11: Value creation from wood
NBSK Green Electricity Wood Derivatives Wood Procurement Wood Products Friesau sawmill acquisition Rostock port expansion Railcar redesign Rail siding acquisitions Wood2M joint venture Arbor Sentinel Chip van fleet replacement Friesau power plant acquisition Stendal 2nd turbine Celgar 2nd turbine Ta
Slide 12: Fiber sourcing advances
Fiber sourcing advances Wood merchandizing We are large buyers of wood in central Europe. Subsequent to the Friesau acquisition, we buy and sell the full spectrum of pulpwood and sawlog grades, selling grades that are surplus to our needs Eastern Europe reach Through our J.V. we source all grades of
Slide 13: Wood logistics capabilities and recent advances
Current capabilities Fleet of 250 modern wood railcars in Europe Fleet of 13 chip trucks and 29 roundwood trucks in Europe Fleet of 8 Ponsse log harvesters and 8 forwarders Significant internal chipping capacity Pulpwood and sawlog logistics is a core competency Recent advances Baltic sea port expan
Slide 14: Why sawmills?
Wood is a core competency we are one of the largest buyers of wood in Europe we have had considerable success turning our innovations into cost reductions strong synergy potential with our German pulp mills wood procurement and logistics wood merchandizing Green electricity production is a core comp
Slide 15: Why Friesau?
Flexible High capacity mill 3 shift capacity is 465 million board feet (1.1 million m³) ability to produce both European and North American standard lumber dimensions in the mid 2000’s the mill was focused on the US market Modernization opportunity the mill was constructed in the mid-90’s; there hav
Slide 16: NBSK margin enhancement: key capital and optimization projects 2013-2016
Key capital and optimization projects 2013-2016 2013Workforce reduction at Celgar – cost reduction 2014Workforce reduction at Stendal – cost reduction 2014Project “Blue Mill” expansion of pulp and electricity production at Stendal – higher pulp and electricity production 2014Tall oil plant at Rosent
Slide 17: NBSK margin enhancement: marketing optimization
Marketing optimization European mills are central and thus freight logical to Europe’s largest paper producing region Logistics division operates a fleet of 57 trucks Expansion of re-load facility at Celgar giving us access to both BN and CP railways New breakbulk shipping program from Canada to red
Slide 18: Operating EBITDA
Note: Some numbers may not add due to rounding For a Reconciliation of Net Income to Operating EBITDA, please refer to Appendix B. Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and non-recurring capital asset impairment charges. It does not reflect the imp
Slide 19: Credit profile
Credit ratings Corporate rating S&P BB- / Moody’s Ba3 Senior notes rating S&P BB- / Moody’s B1 Restructured balance sheet 2014: Stendal minority interest acquired Restricted / unrestricted group structure eliminated Debt reduction Balance sheet recapitalized with lower cost debt 2015:Commenced quart
Slide 20: Appendix A: Detailed Overview of Operations
Appendix A Detailed Overview of Operations
Slide 21: Rosenthal Mill
Location: Blankenstein, Germany (~300 km south of Berlin) Pulp production capacity: 360,000 tonnes per year Electricity generating capacity: 57 MW Certification: ISO 9001, 14001, and 50001 2016 green electricity sales: $17.1 million 2016 biochemical sales: $1.5 million Key Features: Built in 1999 –
Slide 22: Stendal Mill
Location: Stendal, Germany (~130 km west of Berlin) Pulp production capacity: 660,000 tonnes per year Electricity generating capacity: 148 MW Certification: ISO 9001 and 14001 2016 green electricity sales: $45.0 million 2016 biochemical sales: $11.3 million Key Features: Completed in 2004, it’s one
Slide 23: Celgar Mill
Location: Castlegar, BC, Canada (~600 km east of Vancouver) Pulp production capacity: 520,000 tonnes per year Electricity generating capacity: 100 MW Certification: ISO 9001 and 14001 2016 green electricity sales: $9.4 million Key Features: Modern and efficient Abundant and low cost fiber, by global
Slide 24: Friesau Sawmill & Power Plant
Location: Friesau, Germany (~300 km south of Berlin) Lumber production capacity: 465 MMBM Energy generating capacity: 49.5 MW (13 MW electricity) FY2016 under prior owner lumber sales: $115 million (+ $20 million in residuals) FY2016 green electricity sales: $10.0 million Key Features: High quality
Slide 25: Appendix B: Reconciliation of Net Income to Operating EBITDA
Appendix B Reconciliation of Net Income to Operating EBITDA
Slide 26: Reconciliation of Net Income to Operating EBITDA
in US$ millions 2014 2015 2016 Q1 2016 Q1 2017 Net Income (Loss) Attributable to Common Shareholders $113.2 $75.5 $34.9 $8.8$9.7 Add: Net Income Attributable to Non-Controlling Interest7.8---- Add: Income Tax Provision (Benefit) (16.8) 29.4 24.5 6.27.5 Add: Interest Expense 67.5 53.9 51.6 13.213.9 A
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