Mercer International Inc. · NASDAQ:MERC
Mercer International — Jefferies' 2013 Global Industrials Conference
27 slides from Mercer International's conference presentation, Aug 14, 2013
Slide 1: Jefferies' 2013 Global Industrials Conference August 2013
Jefferies' 2013 Global Industrials Conference August 2013
Slide 2: Forward Looking Statements
Forward Looking Statements 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
Slide 3: Mercer International Inc.
Mercer International Inc. ‘com
Slide 4: Mercer - A Snapshot
Mercer - A Snapshot World-class, large, modern mill operations that produce high-quality NBSK pulp Strategically located mills, close to excellent fiber baskets and key markets Strong long-term forecast / supply-demand outlook for NBSK Significant and growing revenue from energy & chemical sales Fin
Slide 5: Corporate Structure
Corporate Structure Pursuant to the terms of its 2017 Senior Notes Mercer conducts operations through three subsidiaries: Rosenthal - Germany Stendal - Germany Celgar - BC, Canada The Corporation is divided into the "Restricted Group" and the "Non-Restricted Group" - a structure created to facilitat
Slide 6: Significant Capacity with Access to Key Global Markets
Significant Capacity with Access to Key Global Markets Mercer's three mills have a combined annual capacity of 1.525 million air-dried metric tonnes (ADMT) of NBSK pulp production and 259 MW of electrical generation Following the completion of Stendal's Project Blue Mill (expected completion at end
Slide 7: Growing Energy and Chemical By-Product Revenues
(CHART) Growing Energy and Chemical By-Product Revenues Mercer has been a leader among paper and forest products companies in embracing the "bio-economy" and in harnessing significant value from the generation of surplus power as well as its production of bio-chemicals Mercer recognized the opportun
Slide 8: Mercer's Recent Developments
Mercer's Recent Developments Celgar 2nd Quarter Maintenance Shut Restarting the mill following the maintenance shut took longer than budgeted, negatively impacting the mill's performance this quarter The mill is producing back at normal levels Celgar Workforce Reduction Expected to improve fixed cos
Slide 9: The NBSK Market
The NBSK Market NASDAQ:MERC | TSX:MRLU | mercerint.com
Slide 10: Introduction to the Major Themes in NBSK
Introduction to the Major Themes in NBSK The impact of digital media on paper demand ? Current themes surrounding the NBSK market include: The effect of China and other emerging economies' continuing growth ? The net supply impact of mill closures, starts/restarts, and facility conversions ? The pot
Slide 11: NBSK Market Trending from Balanced to Tight
After undergoing significant changes over the past 20+ years, the market for NBSK is trending from balanced to tight, with the meaningful substitution of NBSK for other pulps largely completed Putting NBSK's History into Perspective (CHART) Shortage! ? price surge Sources: Factset FOEX PIX Pulp NBSK
Slide 12: Changes to NBSK End Use Markets
Source: Brian McClay 2012 (end use) / Hawkins Wright 2012 (total demand) Source: RISI 2011 Changes to NBSK End Use Markets Changes to Papermakers' Demand for NBSK (CHART) 7% 60% 15% 18% 5% 33% 25% 37% NBSK's strength attributes make it a necessary input for many of the fast-growing, high-end grades
Slide 13: China's Growing Demand
China's Growing Demand Source: PPPC 2012 * 2012E assumes same breakdown of grades as in 2010, for illustrative purposes (CHART) (CHART) P&W Woodfree: 9.9% Paper Board: 9.6% Kraft & Spec.: 11.0% (CHART) Tissue: 14.7% CAGR: 2004 - 2012* Region: '95 - '10 CAGR 2001 2002 2003 2004 2005 2006 2007 2008 20
Slide 14: China's Growing Demand
China's Growing Demand Source: PPPC - Trends in P&W Papers and Tissues (Emanuele Bono, Nov. 2012) Reasons China's demand is growing rapidly... ... and its pulp supply isn't currently keeping pace (CHART) Over time , the market will easily absorb new tissue capacity Avg 10 Year Growth Rate: 10% Avg 1
Slide 15: NBSK Supply / Demand Summary
NBSK Supply / Demand Summary Demand Fundamentals Supply Fundamentals Demand for NBSK is still growing globally Improving economic conditions for emerging countries Digital substitution Supply growth potential for NBSK is limited NBSK supply increases are limited due to fiber supply and the economics
Slide 16: Balance Sheet - June 30, 2013
Balance Sheet - June 30, 2013 in millions Restricted Unrestricted Adjustments Consolidated ASSETS Cash, Cash Equivalents € 69.4 € 65.0 - € 134.4 Receivables 49.7 47.3 - 97.0 Inventories 64.2 44.0 - 108.2 Other Current Assets 10.1 6.6 - 16.7 Total Current Assets 193.4 162.9 - 356.3 Property, Plant an
Slide 17: Selected Historical Financial Data (Consolidated)
Selected Historical Financial Data (Consolidated) in millions, except for per share data 2010 2011 2012 Q2-2012 Q2-2013 Pulp Revenue €856.3 €831.4 €761.9 €186.1 €193.6 Energy and Chemical Revenue 49.3 68.1 72.2 18.0 16.5 Total Revenue €905.6 €899.5 €834.1 €204.1 €210.1 Operating Income (Loss) €167.7
Slide 18: Significant Earning Potential
Significant Earning Potential China's fiscal tightening combined with weakness in Europe create NBSK trough pricing conditions Prices have been slowly improving from recent lows, and we expect continued improvement Annual Consolidated Operating EBITDA (1) (CHART) (CHART) 2009 2010 2011 2012 2013 Qua
Slide 19: Appendix A: Additional Information on Mercer International Inc.
Appendix A Additional Information on Mercer International Inc.
Slide 20: Mercer - Corporate Overview
Mercer - Corporate Overview Mercer owns three large, modern pulp mills - one located in BC, Canada and two in Germany The assets have a combined annual capacity of approximately 1.5 million tpy of NBSK, a premium grade of pulp with excellent strength properties A significant and growing portion of r
Slide 21: History of Mercer's Debt Structure
History of Mercer's Debt Structure
Slide 22: Appendix B: Detailed Overview of Operations
Appendix B Detailed Overview of Operations
Slide 23: Rosenthal Mill
Rosenthal Mill (1) 2012 average EUR:USD fx of 1.2860 Mercer International Group: Restricted Group Location: Blankenstein, Germany (~300 km south of Berlin) Pulp Production Capacity: 355,000 ADMT / year Electricity Generating Capacity: 57 MW Certification: ISO 9001, 14001, and 50001 2012 Green Electr
Slide 24: Celgar Mill
Celgar Mill Mercer International Group: Restricted Group Location: Castlegar, BC, Canada (~600 km east of Vancouver) Pulp Production Capacity: 520,000 ADMT / year Electricity Generating Capacity: 100 MW Certification: ISO 9001 and ISO 14001 2012 Green Electricity Sales: €13.4 million (US$17.2 millio
Slide 25: Stendal Mill
Stendal Mill Mercer International Group: Unrestricted Group Location: Stendal, Germany (~130 km west of Berlin) Pulp Production Capacity: 650,000 ADMT / year Electricity Generating Capacity: 102 MW Certification: ISO 9001 and ISO 14001 certified 2012 Green Electricity Sales: €32.2 million (US$41.4 m
Slide 26: Appendix C: Reconciliation of Net Income to Operating EBITDA
Appendix C Reconciliation of Net Income to Operating EBITDA
Slide 27: Reconciling Net Income (Loss) to Operating EBITDA
Reconciling Net Income (Loss) to Operating EBITDA Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and non-recurring capital asset impairment charges. Management uses Operating EBITDA as a benchmark measurement of its own operating results, and as a benchmark
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