Mercer International Inc. · NASDAQ:MERC
Mercer International — Q4 2024 Earnings Presentation
22 slides from Mercer International's earnings presentation, Feb 21, 2025
Slide 1: Mercer International Inc. Q4 2024 Earnings Call
Mercer International Inc. Transforming biomass into bioproducts for a more sustainable world Q4 2024 Earnings Call February 21, 2025 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 Results Overview
Financial Results Overview EBITDA Increased Quarter-Over-Quarter Highlights 2024 Full Change • EBITDA increased quarter-over-quarter EBITDA (US$ millions) Q3 2024 Q4 2024 due to: Year (+/-) • No days of planned maintenance Pulp Segment(1) $261 $55 $106 $51 downtime • A strong U.S. dollar; and Solid
Slide 4: Pulp Prices
Pulp Segment Pulp Prices Pricing Overview Modest Decrease in Realized Pricing in Q4 Realized Pulp Price (US$ / tonne) Region Q3 2024 Q4 2024 NBSK List Price (US$ / tonne) $1,000 Domestic $1,762 $1,687 $800 China (net) $771 $767 $600 Europe $1,573 $1,500 NBHK List Price (US$ / tonne) $400 Domestic $1
Slide 5: Pulp Segment Key Performance Indicators
Pulp Segment Key Performance Indicators Sales Volume (000s tonnes) Mill Planned Downtime (Days) 449 452 • Q1 2025: 21 days (Celgar) Q3 2024 Q4 2024 Production Volume (000s tonnes) 438 467 467 416 20 - Q3 2024 Q4 2024 Q3 2024 Q4 2024 Planned Start-up Production (Actual) Production (Adjusted) (1) 1) A
Slide 6: Lumber Overview
Solid Wood Segment Lumber Overview Benchmark Lumber Price Lumber Operations (mmfbm) Random Lengths WSPF 2&btr 2x4 (US$ / mfbm) $1,500 $1,200 122 124 115 109 $900 $600 $300 $0 2021 2022 2023 2024 Q3 2024 Q4 2024 Production Sales 6
Slide 7: Electricity and Mass Timber
Electricity and Mass Timber Electricity Mass Timber Production (000s m3) 241 205 10 6 Q3 2024 Q4 2024 Sales Volume (GWh) $109 $91 Q3 2024 Q4 2024 Mass timber production decreased in Q4 due to lower Q3 2024 Q4 2024 sales volume as we completed two large mass timber Price ($ / MWh) projects in Q3 7
Slide 8: Financial Position
Financial Position Summary Highlights US$mm unless otherwise stated • Stronger US dollar boosted Q4 operating income by ~$26 Measure 2024 Full Year Q3 2024 Q4 2024 Change (+/-) million compared to Q3 Net Income / (Loss) ($85) ($18) $17 $35 • Refinanced former 2026 senior notes while extending the In
Slide 9: Evolving Market Dynamics
Evolving Market Dynamics Strong Quarterly Performance Managing Tariff-Related Uncertainties • Strong softwood pulp markets • Demand and pricing of products and raw materials may be impacted by ongoing developments of tariffs involving Canada, • Favorable FX movement with rapid the EU, and China appr
Slide 10: Pulp Markets
Pulp Markets NBSK NBHK • Softwood pricing remains strong • Weaker prices as additional capacity that came online in 2024 was absorbed in the market • Permanent closures of NBSK mills and temporary curtailments due to fiber shortages and • Seeing some upward pricing pressure due to unplanned downtime
Slide 11: Fiber Costs
Fiber Costs Fiber Costs Remained Flat for both Pulp and Lumber Per Unit Fiber Costs Steady German sawmill chips, Peace River woodroom and Celgar wood strategy kept pulp fiber costs steady Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4' 24 Pulp (US$ / ADMT) Lumber (US$ / m3) Looking ahead
Slide 12: Mass Timber
Mass Timber • Strong customer interest; current order file is ~$36 million • High interest rate will be a headwind on short-term growth; recovery expected in the latter of 2025 • North American mass timber demand expected to grow in popularity at a similar pace to Europe due to environmental, econom
Slide 13: Lumber Markets
Lumber Markets • US prices expected to moderately improve in Q1 due to limited supply • European lumber prices also trending upwards, driven by improving economic conditions in certain European countries • Long-term price improvement in both markets reliant on economic recovery, spurred by interest
Slide 14: Pallets & Pellets
Pallets & Pellets Pallet Pellet • Shipping pallet market remains weak due to • Heating pellet prices up slightly in Q4 due to overhang of European economy (especially expected seasonality in this market Germany) • Demand and prices to be steady in Q1 as cooler • Once recovery shows signs, pallet pri
Slide 15: Pulp Operations
Pulp Operations 2025 Planned Major Maintenance Shut • Celgar has moved to an 18-month major planned maintenance schedule • The expected maintenance schedule for 2025 as follows: Q1: Q2: Q3: Q4: Celgar (21 days) Peace River (18 days) Rosenthal (14 days) Stendal (18 days) Stendal (3 days)
Slide 16: Capital Allocation
Capital Allocation 2024 2025 • Total capex spending in Q4 of $21 million • Prioritization of maintenance, environmental and safety capex • Full year underspend primarily due to project delays • Completion of Torgau lumber expansion project and Celgar woodroom will provide significant added value $10
Slide 17: High-Return Capex Projects
High-Return Capex Projects Strategic and high-return capex projects at our Torgau and Spokane mills are underway • Project will increase lumber production capacity • Project focuses on wood infeed and finger- and volume of dimensional lumber available for jointing processes at Spokane to allow utili
Slide 18: Bioproducts for a More Sustainable World
Bioproducts for a More Sustainable World Lignin Extraction Plant • New lignin extraction pilot plant at Rosenthal; ramp-up and expected commercialization are going as planned, with an estimated cost for a commercially sized lignin production facility to be ~$90 million • Aligned with strategy to exp
Slide 19: 2025 Outlook
2025 Outlook Sector-wide Macroeconomy • Strong softwood pulp market • Potential trade war remains • Larger than usual shut in Q1 • Pallet and lumber demand uncertain at Celgar of 21 days to allow under pressure due to weak • Inflation could accelerate and for both planned economy become a global iss
Slide 20: Contact Information
Contact Mercer International Inc. Information P: +1 (604) 684 1099 info@mercerint.com Suite 1120, 700 West Pender St Vancouver, B.C. Canada www.mercerint.com V6C 1G8
Slide 21: Reconciling Net Income (Loss) to Operating EBITDA
Reconciling Net Income (Loss) to Operating EBITDA Consolidated (US$ millions) Q3 2024 Q4 2024 2024 Full Year Net income (loss) ($17.6) $16.7 ($85.1) Income tax provision (recovery) (0.1) 3.4 (1.8) Interest expense 26.4 28.3 109.2 Other expense (income) 0.1 1.9 (7.3) Operating income 8.8 50.4 15.0 Ad
Slide 22: Reconciling Net Income (Loss) to Operating EBITDA
Reconciling Net Income (Loss) to Operating 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