Mercer International Inc. · NASDAQ:MERC
Mercer International — Q3 2023 Earnings Presentation
18 slides from Mercer International's earnings presentation, Nov 3, 2023
Slide 1: Mercer International Inc. Q3 2023 Earnings Conference Call
Mercer International Inc. Transforming biomass into bioproducts for a more sustainable world Q3 2023 Earnings Conference Call November 3, 2023 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 & Operating Highlights
Financial & Operating Highlights 3
Slide 4: Financial Results Overview
Financial Results Overview Significant EBITDA Improvement vs. Q2 Fibre Costs Down in Both Pulp & Solid Wood Per Unit Fibre Costs EBITDA (US$ millions) Q2 2023 Q3 2023 Change (+/-) Pulp Segment ($56) $49 +$105 Solid Wood Segment ($10) ($7) +$3 Corporate & Other ($3) ($4) ($1) Due to calamity Total EB
Slide 5: Pulp Prices
Pulp Segment Pulp Prices Pricing Overview Pricing Trend Realized Pulp Price (US$ / ADMT) Region Q2 2023 Q3 2023 NBSK List Price (US$ / ADMT) China (net) $668 $680 Europe $1,247 $1,160 NBHK List Price (US$ / ADMT) Domestic $1,277 $1,023 China (net) $483 $530 NBSK / NBHK Price Gap (US$ / ADMT) Q4 '21
Slide 6: Key Performance Indicators
Pulp Segment Key Performance Indicators Production / Sales Volume (000s ADMT) Mill Downtime (Days) 537 60 26 days of curtailment 476 480 487 at Celgar due to logistics issues 39 35 26 25 13 Q2 2023 Q3 2023 Q2 2023 Q3 2023 Production Sales Planned Maintenance Curtailment 6
Slide 7: Lumber Overview
Solid Wood Segment Lumber Overview Benchmark Lumber Price Lumber Operations (mmfbm) Random Lengths WSPF 2&btr 2x4 (US$ / mfbm) $1,500 161 Production down due to maintenance work completed in Q3 131 115 $1,100 94 $700 $300 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1'23 Q2 '23 Q3 '23 Q2 2023 Q3 2023 Product
Slide 8: Electricity and Mass Timber
Electricity and Mass Timber Electricity Mass Timber Revenue (US$mm) 250 254 19 14 Q2 2023 Q3 2023 Sales Volume (GWh) $106 $113 Q2 2023 Q3 2023 MMT has a growing order book we expect to fulfill over coming months Q2 2023 Q3 2023 Price ($ / MWh) 8
Slide 9: Financial Position
Financial Position Summary Securing Liquidity US$mm unless otherwise stated • Completed $200mm private senior notes offering due 2028; Measure Q2 2023 Q3 2023 Change (+/-) • Increased availability of German Net Income (Loss) ($98) ($26) +$72 revolving credit facilities by ~€70mm to €370mm Earnings (
Slide 10: Markets, Capital Plan & Strategic Initiatives
Markets, Capital Plan & Strategic Initiatives 10
Slide 11: Pulp Markets
Pulp Markets Prices and Supply Demand • Appears market has hit floor; modest price • Weak demand in both Europe and North America increases in either Q3 or early Q4 • European producers running at reduced rates • Increases driven by paper producer restocking due weak economy and the effects of the U
Slide 12: Operating Results
Operating Results Quarter Updates • Forced to take 26-day curtailment in August at Celgar due Q4 Maintenance to port strike Stendal – 3 days: final repairs to wood yards • Proactive measures to reduce capex to $140 million for conveyor system damaged in 2022 2023 Celgar – 26 days: major maintenance
Slide 13: Lumber Markets
Lumber Markets • US market up slightly, European market down compared to Q2 • High interest rates continue to weigh on housing starts Drivers of Positive Pressure on Mid-Term Supply-Demand Fundamentals: Low Lumber Sawmill Low Housing Recent Canadian Constructive Channel Curtailments Stock Forest Fir
Slide 14: Growing Spectrum of Products
Growing Spectrum of Products • Shipping pallet markets remain weak Pallets & • Pallet prices expected to normalize once European economy shows signs of recovery Pellets • In Q3 heating pellet prices up ~20% vs. Q2 due to seasonal demand • We hold ~35% of North American mass timber production capacit
Slide 15: Bioproducts for a More Sustainable World
Bioproducts for a More Sustainable World Lignin Extraction Plant Sustainable Fossil Fuel Substitutes • New lignin extraction plant at Rosenthal continues to ramp-up as planned Potential demand is significant • Aligned with strategy to expand into green Potential to be transformative for the wood che
Slide 16: Contact Information
Contact Mercer International Inc. Information P: +1 (604) 684 1099 info@mercerint.com Suite 1120, 700 West Pender St Vancouver, B.C. Canada www.mercerint.com V6C 1G8
Slide 17: Reconciling Net Income (Loss) to EBITDA
Reconciling Net Income (Loss) to EBITDA Consolidated (US$ millions) Q2 2023 Q3 2023 Net Income (Loss) Attributable to Common Shareholders ($98.3) ($26.0) Income tax provision (recovery) (27.5) 4.0 Interest expense 20.1 21.9 Other income (3.1) (3.3) Operating income (loss) (108.8) (3.4) Add: Deprecia
Slide 18: 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