Mercer International Inc. · NASDAQ:MERC
Mercer International — Investor Presentation (June 2021)
38 slides from Mercer International's investor presentation, June 2021
Slide 1: Investor Presentation
Mercer International Inc. Investor Presentation June 2021 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: Building a Platform for Growth
Building a Platform for Growth Rosenthal tall DMI oil plant 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
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
Slide 5: Products Sales Mix
Products Sales Mix(1)(2) Energy / U.S. Other Bio-extractives Other U.S. Lumber Germany 13% 7% 14% 30% 24% Pulp 28% 54% 79% 22% 30% China Germany Products Pulp Segment Wood Products Segment(3) 1) Q1 2021 LTM by Revenue 2) Excludes Energy sales from 50% owned Cariboo mill 3) Includes wood residual sal
Slide 6: Mercer's 5-Pillar Strategy
Mercer’s 5-Pillar Strategy Operate World-class Managing the Growth and Sustainable Develop Our Talent Assets Integrity of our Diversification where Operations Balance Sheet and we have Core Liquidity Competencies Pulp Wood Products Wood Extractives Green Energy 6
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 markets of world Asia, Europe and North America Low cost and energy efficient Top NBSK Market Pulp Producers b
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 one of the world’s West Fraser Quesnel Mercer Friesau Binderholz Kösching largest sawmills Offner Wolfberg Ilim Landsberg Unique flexibility to produce metric and
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
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: 1,600 1,400 Bio-extractives/other Construction of Stendal NBSK mill in 2004 Wood product
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
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 c
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
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
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
Slide 16: Financial Performance
Financial Performance Annual Operating EBITDA(1)(2) Operating EBITDA(1)(2) remains highly $400 $1,400 Operating EBITDA NBSK Prices 1,170 influenced by global NBSK pricing, 1,120 NBSK Price ($/ADMT) $350 1,030 $1,200 however: $300 910 933 910 810 810 820 $1,000 ($ millions) 798 $250 Green electrici
Slide 17: Current Market Conditions
Current Market Conditions Pulp Lumber Steady demand and falling inventories will improve We expect US lumber prices to remain at elevated markets over time levels over the next year, supported by rising Demand Steady mid-term growth from emerging economies, housing starts, low interest rates a
Slide 18: Sustainable, Long-term Growth
Attractive long-term fundamentals in Sustainable, Long-term key markets Management committed to growth, in spaces where we have clear competencies Prudent and agile balance sheet discipline, commitment to the dividend Growth Commitment to sustainability, our people and our communities; a sound found
Slide 19: Contact Information
Contact Mercer International inc. Information P: +1 (604) 684 1099 info@mercerint.com Suite 1120, 700 West Pender St Vancouver, B.C. Canada www.mercerint.com V6C 1G8 19
Slide 20: Reconciling Net Income (Loss) to EBITDA
Reconciling Net Income (Loss) to EBITDA Q1 2021 Consolidated (US$ 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) (7.9) Shareholders Add: Income Tax Provision (Benefit) 24.5 33.5 48.7 19.2 6.1 3.5 Add: Interest Expense 51.6
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: Appendix: Market Attributes
Appendix: Market Attributes Sustainable. By Design. 22
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
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
Slide 25: Global Bleached Kraft Pulp Market
Global Bleached Kraft Pulp Market(1) Global Bleached Kraft Pulp Demand 75.0 Global Bleached Kraft Pulp Demand 64.1 37.5 61.1 62.6 59.0 60.1 60.0 59.8 33.7 33.5 34.3 30.0 millions of tonnes 45.0 millions of tonnes China China China China China China 26.2 25.6 25.8 22.5 30.0 15.0 15.0 7.5 - 2019 2020
Slide 26: NBSK Demand Drivers
NBSK Demand Drivers 28.0 Global BSK Demand by Region(1) 40% Region 2000 – 2024E CAGR China 9.7% NBSK Demand Changes millions of tonnes % China of Total 21.0 30% W. Europe Increased NBSK demand for tissue and specialty (1.8%) products continues to rise globally 14.0 20% N. America In developing c
Slide 27: Variable Market Conditions
Variable Market Conditions 27
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 Continuation of a trend by some expansion in Scandinavia form 2016- 4 million tonnes in the next few years producers to exit these softwood grades 2018, fore
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
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
Slide 31: Appendix: Operations Overview
Appendix: Operations Overview Sustainable. By Design. 31
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
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
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
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
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: •
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: $
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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