Mercer International Inc. · NASDAQ:MERC
Mercer International — Investor Presentation (December 2020)
37 slides from Mercer International's investor presentation, December 2020
Slide 1: Investor Presentation
Investor Presentation December 2020
Slide 2: Safe harbor for forward-looking statements
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain for forward-looking information included in this presentationstatements. Certain contains statements inf
Slide 3: Building a Platform for Growth
Building a Platform for Growth A history of execution… Stendal minority interest buyout Rebuild of Acquisition of Celgar “Green and refinancing Santanol Friesau sawmill Rosenthal mill Celgar mill Energy Project” Rosenthal tall oil plant acquisition expansion 1994 1999 2004 2005 2007 2010 2013 2014 2
Slide 4: Diverse Products, Global Reach
Diverse Products, Global Reach Strategically Located Facilities with Excellent Access to Key Markets Peace River Rosenthal 475,000 tonnes NBSK/NBHK 360,000 tonnes NBSK Stendal 57 MW energy 660,000 tonnes NBSK 70 MW energy 148 MW energy Cariboo 170,000 tonnes NBSK (1) 28.5 MW energy (1) Celgar Santan
Slide 5: Continuously Improving, Competitive Pulp Mills
Continuously Improving, Competitive Pulp Mills Our pulp operations are some of the largest and most modern facilities in the world • Low production cost • Strong environmental performance • Low maintenance capital requirements • Net energy exporters NBSK Producer Competitiveness (1)(2) Energy & Bio-
Slide 6: Expanding our Pulp Mill Platform
Expanding our Pulp Mill Platform Acquisition of DMI advances our long term growth strategy Expands product offering to include NBHK Further solidifies our position as a top global NBSK producer Improves exposure to growing markets in Asia New forest tenures strengthens raw material supply at times o
Slide 7: Friesau Sawmill: Building on Success
Friesau Sawmill: Building on Success Top 20 Largest Softwood Sawmills (1) A strong entry into the global softwood lumber market Ilim Wismar Comparable size to largest sawmills in North Canfor Plateau America Canfor Houston Capable of producing green, kiln-dried and West Fraser Quesnel planed lumber
Slide 8: Core Competencies
Core Competencies Innovation • Wood logistics • Wood merchandising • Waste wood utilization • Energy and bio-extractives growth • Wood costs reduction • Productivity improvements Phase II expansion: new Excellence in Execution planer, kilns and lumber sorters – Friesau Second turbine Tall oil plant
Slide 9: Executing Mercer's 4-Element Strategy
Executing Mercer’s 4-Element Strategy World class assets 1 • Driving Celgar to its full potential • Continued debottlenecking at Stendal, Rosenthal and Peace River • Sawline upgrades, sorter expansion and new planer mill at Friesau Target Growth Areas Seize growth opportunities and diversify EBITDA
Slide 10: A Platform of Sustainability
A Platform of Sustainability Sustainable products for a carbon conscious planet: Solid wood products produced from sustainably sourced, certified, private and public land suppliers – Products used in construction and renovation end uses – Displacing higher carbon footprint concrete and steel alter
Slide 11: Liquidity and Debt Maturities
Liquidity and Debt Maturities Liquidity(1) Senior Debt Composition $700 $700 Credit Ratings: S&P Moody’s $638 Corporate: B+ Ba2 $601 Senior notes: B+ Ba3 $600 $600 $567 $547 $550 $500 $500 Outstanding debt ($,millions) 2025 7.375% $423 $425 Senior Notes Liquidity ($,millions) $400 $400 $308 $314 $30
Slide 12: COVID
COVID • The Company has not experienced any material disruptions to its operations or outbreaks since the pandemic was declared in March, 2020: − The Company activated its Crisis Management Plan; a documented communication and decision protocol that was developed to ensure clear communication and de
Slide 13: Long-Term Market Opportunities
Long-Term Market Opportunities 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 housing • Steady mid-term growth from emerging economies, starts and currently low inven
Slide 14: Mercer: Sustainable, Long-Term Growth
Mercer: Sustainable, Long-Term Growth Attractive long-term fundamentals in key markets Management committed to growth, in spaces where we have clear competencies Prudent balance sheet discipline, commitment to the dividend Commitment to sustainability and operational excellence, a strong fou
Slide 15: Appendix A: Market Primer
MD Appendix A Market Primer
Slide 16: Global Wood Fibre Overview
Global Wood Fibre Overview(1) Global Fibre Consumption 406 million tonnes 14.4 Mt Virgin Fibre Wood Pulp Recovered Fibre Other 175 million tonnes 211 million tonnes Virgin Fibre Wood Pulp Chemical Pulp Chemical Pulp Integrated Pulp Market Pulp 60 million tonnes Hardwood Kraft Softwood Kraft 109 mill
Slide 17: NBSK, NBHK Market Overview
NBSK, NBHK Market Overview Northern Bleached Hardwood Kraft Chemical Pulp Demand (1) Northern Bleached Softwood Kraft (“NBHK”) is produced from aspen, (60.0 million tonnes) (“NBSK”) is produced from spruce, maple, balsam and beech grown pine, fir and cedar grown primarily in primarily in Canada, Rus
Slide 18: Global Bleached Kraft Pulp Market
Global Bleached Kraft Pulp Market (1) • From 2019, global BKP demand is forecast to grow by 4.3 million tonnes through 2024, at an average growth rate of 1.4% per year • China is expected to account for the majority of entire global demand growth between 2019 and 2024, increasing demand by 4.1 milli
Slide 19: Pulp Capacity Changes
Pulp Capacity Changes NBSK Market Pulp Net Capacity Changes (1) Price Impact of New Capacity (2) 1,500 $1,400 2.1 1,010 915 Market pulp capacity 1,000 820 000's tonnes $1,200 NBSK cif Europe (gross) 1.8 (3) BEKP cif China (net) 500 Pulp Price ($/tonne) 215 250 $1,000 1.5 105 - - $800 1.2 (15) (105)
Slide 20: NBSK – Demand Drivers
NBSK – Demand Drivers NBSK Demand Changes Global BSK Demand by Region (1) Region 2000 – 2024E CAGR • Increased NBSK demand for tissue and 28.0 40% specialty products continues to rise globally China 9.7% % China of Total millions of tonnes 21.0 30% • In developing countries, demand for NBSK W. Europ
Slide 21: NBSK – The Chinese Market
NBSK – The Chinese Market China is the leader of demand growth in China’s BSK Pulp Demand by End Use (4) developing economies 9.0 End Use 2007 – 2017 CAGR • In China, demand for NBSK grew on average by millions on tonnes 7.5 Other – 7.1% (5) 5.9% between 2013 and 2018 on a compounded basis (1) 6.0 P
Slide 22: NBSK – Pricing Trend
NBSK – Pricing Trend NBSK Price & BSK Global Inventory $1,650 49 $1,500 NBSK Price (noted currency / tonne) 42 Global NBSK Inventory (# Days) $1,350 35 $1,200 $1,050 28 $900 21 $750 14 $600 7 $450 $300 - 2003 2005 2007 2009 2011 2013 2015 2017 2019 (1) (2) (2)(3) (2)(3) BSK Global Inventory NBSK Lis
Slide 23: NBHK – Demand
NBHK – Demand Overview Forecast BHK Demand - Supply Gap 39.0 • The BHK market has grown on average 3.1% per year 38.0 since 2009, in contrast to NBSK which has grown by 3.0% 37.0 millions of tonnes during the same period 36.0 • BHK consists of many species with unique attributes 35.0 34.0 suitable f
Slide 24: NBHK – Pricing Trend
NBHK – Pricing Trend NBHK Price & BHK Global Inventory $1,650 72 $1,500 64 NBSK Price (noted currency / tonne) Global BHK Inventory (# Days) $1,350 56 $1,200 48 $1,050 40 $900 32 $750 24 $600 16 $450 8 $300 - 2005 2007 2009 2011 2013 2015 2017 2019 BHK Global Inventory (1) NBHK List Price (in US$) (
Slide 25: Appendix B: Overview of Operations
Appendix B Overview of Operations
Slide 26: Rosenthal Mill
Rosenthal Mill • Location: Blankenstein, Germany (~300 km south of Berlin) • Pulp production capacity: 360,000 tonnes per year NBSK • Electricity generating capacity: 57 MW • Certification: ISO 9001, 14001, and 50001 • 2019 green electricity sales: $15.9 million • 2019 bio-extractives sales: $0.3 mi
Slide 27: Stendal Mill
Stendal Mill • Location: Stendal, Germany (~130 km west of Berlin) • Pulp production capacity: 660,000 tonnes per year NBSK • Electricity generating capacity: 148 MW • Certification: ISO 9001, 14001, and 50001 • 2019 green electricity sales: $46.7 million • 2019 bio-extractives sales: $11.1 million
Slide 28: Celgar Mill
Celgar Mill • 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 • 2019 green electricity sales: $7.4 million Key Features: • Modern and efficient • Abundan
Slide 29: Peace River Mill
Peace River Mill • 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 • 2019 green electricity sales: $5.0 million Key Features: • Modern, high p
Slide 30: Cariboo Mill (50% JV Owned)
Cariboo Mill (50% JV Owned) • 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 • 2019 green electricity sales: $4.6 million (2) Key Feat
Slide 31: Friesau Sawmill & Power Plant
Friesau Sawmill & Power Plant • Location: Friesau, Germany (~300 km south of Berlin) • Lumber production capacity: 550,000 Mfbm • Energy generating capacity: 49.5 MW (13 MW electricity) • 2019 lumber sales: $142.2 million • 2019 wood residuals sales: $8.0 million • 2019 green electricity sales: $9.7
Slide 32: Appendix C: Financial Highlights
Appendix C Financial Highlights
Slide 33: EBITDA and EBITDA Margin
EBITDA and EBITDA Margin Annual Operating EBITDA (1)(2) Operating EBITDA ($,millions) $500 $400 $365 $300 $233 $254 $241 $235 $187 $210 $200 $138 $109 $113 $100 - 2011 2012 2013 2014 2015 2016 2017 2018 (3)(4) 2019 (4) LTM Q3'20 (4) Annual Operating EBITDA Margin (1)(2)(4) 40% Consolidated Margin Pu
Slide 34: Credit Profile
Credit Profile Restructured balance sheet 2014 Acquired the minority interest in Stendal Senior Debt Composition $600 Restricted / unrestricted group structure eliminated Debt reduction 2025 7.375% Balance sheet recapitalized with lower cost debt Senior Notes Outstanding debt ($million) $450 2015 Co
Slide 35: Reconciling Net Income to EBITDA
Reconciling Net Income to EBITDA Consolidated (US$ millions) 2016 2017 2018(1)(2) 2019(2) LTM Q3’20(2) Net Income (Loss) Attributable to Common Shareholders 34.9 70.5 128.6 (9.6) (77.0) Add: Income Tax Provision (Benefit) 24.5 33.5 48.7 19.2 (11.4) Add: Interest Expense 51.6 54.8 51.5 75.8 80.7 Add:
Slide 36: Reconciling Net Income to EBITDA
Reconciling Net Income 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 (loss) plu
Slide 37: Mercer International Inc.
Mercer International Inc. www.mercerint.com Phone: (1) 604 684 1099 | Fax: (1) 604 684 1094 Suite 1120, 700 West Pender Street, Vancouver, BC, V6C 1G8, Canada Copyright© 2018 Mercer International Inc.
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