Mercer International Inc. (Nasdaq: MERC) today reported third
quarter 2024 Operating EBITDA of $50.5 million, an increase from
$37.5 million in the same quarter of 2023 and $30.4 million in the
prior quarter of 2024.
In the third quarter of 2024, net loss was $17.6
million ($0.26 per share) compared to a net loss of $26.0 million
($0.39 per share) in the third quarter of 2023 and a net loss of
$67.6 million ($1.01 per share) in the second quarter of 2024,
which included a non-cash impairment of $34.3 million ($0.51 per
share) against goodwill related to the Torgau facility.
Mr. Juan Carlos Bueno, Chief Executive Officer,
stated: "In the third quarter, softwood pulp markets continued to
be strong and fiber costs remained stable. However, our operating
results were constrained as a result of lower pulp sales volumes
caused by unplanned downtime at our Peace River mill and other
unexpected production events. In the third quarter of 2024, these
events had an impact on our production of approximately 71,200
ADMTs.
Our team was able to restart the Peace River
mill earlier than initially expected, limiting the related downtime
in the fourth quarter to an additional 12 days. We have no
remaining downtime planned at our pulp mills for the rest of
2024.
While demand is traditionally weaker in the
third quarter due to seasonal factors, softwood pulp prices in both
North America and Europe remained at historically high levels. In
China, there was positive pricing momentum for softwood pulp
towards the end of the third quarter, after some modest decrease
earlier in the quarter. As we move into the fourth quarter of 2024,
we currently expect relatively stable softwood pulp sales
realizations as slightly lower demand is offset by continued supply
constraints.
Hardwood pulp prices in China decreased in the
third quarter of 2024 as the market absorbed increased capacity.
Pricing appears to be now stabilizing in the fourth quarter.
Lumber sales realizations decreased slightly in
the third quarter of 2024 compared to the second quarter. We
currently expect to see moderate increments in lumber prices in
both the United States and United Kingdom markets in the fourth
quarter of 2024.
Overall per unit fiber costs for both our pulp
and solid wood segments were flat in the third quarter of 2024
compared to the second quarter of 2024. In the fourth quarter, we
currently expect relatively stable per unit fiber costs in our pulp
segment and modestly higher per unit fiber costs in our solid wood
segment due to strong demand.
We recently announced the refinancing of our
$300 million 2026 Senior Notes, using cash on hand and the proceeds
of our recently completed add-on offering of $200 million of our
existing 12.875% 2028 Senior Notes. The new issuance was at a
103.000% premium to their principal amount, for a yield to worst of
11.624%. This transaction decreases our long-term debt by $100
million and extends the maturity of our earliest senior note debt
to 2028, lowering exposure to market volatility. Going forward over
the medium-term, we are focused on our objective to further reduce
our debt.
In our solid wood segment, our mass timber
business continued to make strong progress as we successfully
completed two of the largest mass timber buildings ever constructed
in the United States. We remain focused on growing our mass timber
business organically and are committed to our prior strategic
investments in our solid wood segment. High interest rates continue
to impact construction activity in Europe and North America,
dampening the near-term growth for this segment. As these cyclical
conditions improve, we believe our businesses in this segment are
well positioned to grow profitably."
Mr. Bueno concluded: "Going into the fourth
quarter, with the impacts of the unplanned downtime and production
events behind us, we are optimistic that we will be able to
capitalize on the continued strength we are seeing in softwood pulp
markets."
____________________
*Operating EBITDA is not a measure of financial
performance under accounting principles generally accepted in the
United States ("GAAP") and should not be considered in isolation or
as a substitute for analysis of our results as reported under GAAP.
See page 6 of the financial tables included in this press release
for a reconciliation of net loss to Operating EBITDA.
Consolidated Financial
Results
| |
Q3 |
|
|
Q2 |
|
|
Q3 |
|
|
YTD |
|
|
YTD |
|
| |
2024 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
| |
(in thousands, except per share amounts) |
|
|
Revenues |
$ |
502,141 |
|
|
$ |
499,384 |
|
|
$ |
470,821 |
|
|
$ |
1,554,955 |
|
|
$ |
1,523,350 |
|
| Operating income (loss) |
$ |
8,841 |
|
|
$ |
(43,779 |
) |
|
$ |
(3,426 |
) |
|
$ |
(35,386 |
) |
|
$ |
(132,379 |
) |
| Operating EBITDA |
$ |
50,455 |
|
|
$ |
30,439 |
|
|
$ |
37,527 |
|
|
$ |
144,495 |
|
|
$ |
(3,683 |
) |
| Net loss |
$ |
(17,559 |
) |
|
$ |
(67,586 |
) |
|
$ |
(25,956 |
) |
|
$ |
(101,848 |
) |
|
$ |
(154,840 |
) |
| Net loss per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.26 |
) |
|
$ |
(1.01 |
) |
|
$ |
(0.39 |
) |
|
$ |
(1.53 |
) |
|
$ |
(2.33 |
) |
|
Diluted |
$ |
(0.26 |
) |
|
$ |
(1.01 |
) |
|
$ |
(0.39 |
) |
|
$ |
(1.53 |
) |
|
$ |
(2.33 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated – Three Months Ended
September 30, 2024 Compared to Three Months Ended
September 30, 2023
Total revenues for the third quarter of 2024
increased by approximately 7% to $502.1 million from $470.8 million
in the same quarter of 2023 primarily due to higher pulp and
manufactured products sales realizations partially offset by lower
overall sales volumes. Particularly, in the third quarter of 2024,
pulp sales volumes were impacted by several unrelated events,
including unscheduled downtime at our Peace River mill, a slower
than normal maintenance start-up at our Stendal mill and isolated
mechanical incidents at our Celgar mill.
Costs and expenses in the third quarter of 2024
increased by approximately 4% to $493.3 million from $474.2 million
in the same quarter of 2023 driven by higher per unit fiber costs
partially offset by lower pulp sales volumes. In the third quarter
of 2024, we recorded a $4.0 million non-cash inventory impairment
at our Peace River mill as a result of lower NBHK pulp prices. Per
unit fiber costs increased relative to the third quarter of 2023
because the comparative period included the sale and revaluation of
previously impaired inventory. After giving effect to such
impairments, overall per unit fiber costs in the third quarter of
2024 decreased slightly compared to the same period of 2023.
In the third quarter of 2024, Operating EBITDA
increased by approximately 35% to $50.5 million from $37.5 million
in the same quarter of 2023 primarily due to higher pulp and
manufactured products sales realizations partially offset by higher
costs and expenses and lower pulp sales volumes as a result of
unplanned downtime.
Segment Results
Pulp
| |
Three Months Ended September 30, |
|
| |
2024 |
|
|
2023 |
|
| |
(in thousands) |
|
|
Pulp revenues |
$ |
354,176 |
|
|
$ |
318,102 |
|
| Energy and chemical
revenues |
$ |
19,092 |
|
|
$ |
30,751 |
|
| Operating income |
$ |
25,994 |
|
|
$ |
21,181 |
|
| |
|
|
|
|
|
|
|
Pulp segment operating income increased by
approximately 23% to $26.0 million in the third quarter of 2024
from $21.2 million in the same quarter of 2023 primarily due to
higher pulp sales realizations partially offset by higher costs and
expenses and lower sales volumes caused by unplanned downtime.
Pulp segment revenues, which includes pulp,
energy and chemical revenues, in the third quarter of 2024
increased by approximately 7% to $373.3 million from $348.9 million
in the same quarter of 2023 as higher pulp revenues were partially
offset by lower energy and chemical revenues.
Pulp revenues in the third quarter of 2024
increased by approximately 11% to $354.2 million from $318.1
million in the same quarter of 2023 as a result of higher sales
realizations partially offset by lower sales volumes.
In the third quarter of 2024, third party
industry quoted average list prices for NBSK pulp increased in both
Europe and North America from the same quarter of 2023. Third party
industry quoted average net prices for NBSK pulp in China also
increased from the same quarter of 2023. Our average NBSK pulp
sales realizations in the third quarter of 2024 increased by
approximately 22% to $814 per ADMT from $666 per ADMT in the same
quarter of 2023. In the third quarter of 2024, average NBHK pulp
sales realizations increased by approximately 19% to $632 per ADMT
from $530 per ADMT in the same quarter of 2023.
Total pulp sales volumes in the third quarter of
2024 decreased by approximately 8% to 448,856 ADMTs from 487,199
ADMTs in the same quarter of 2023 primarily due to lower
production.
Energy and chemical revenues in the third
quarter of 2024 decreased by approximately 38% to $19.1 million
from $30.8 million in the same quarter of 2023 primarily due to
lower sales realizations and sales volumes.
Costs and expenses in the third quarter of 2024
increased by approximately 6% to $348.6 million from $327.9 million
in the same quarter of 2023 primarily due to higher per unit fiber,
maintenance and freight costs and the negative impact of a weaker
dollar, partially offset by lower pulp sales volumes and lower per
unit energy and chemical costs.
Total pulp production in the third quarter of
2024 decreased by approximately 13% to 415,837 ADMTs compared with
479,924 ADMTs in the same quarter of 2023 as a result of the
disposal of the CPP joint venture investment in the first quarter
of 2024, unplanned downtime at the Peace River mill to complete
necessary repairs to the mill’s digester after experiencing a
mechanical failure, the impacts of a slower than normal maintenance
start-up at our Stendal mill and isolated mechanical incidents at
our Celgar mill, partially offset by the port strike related
curtailment at the Celgar mill in the third quarter of 2023. We
estimate that annual maintenance downtime in the third quarter of
2024 adversely impacted our operating income by approximately $17.8
million, comprised of approximately $11.2 million in direct
out-of-pocket expenses and the balance in reduced production. We
estimate that unplanned downtime at the Peace River mill in the
third quarter of 2024 adversely impacted our operating income by
approximately $9.2 million in direct out-of-pocket expenses and
reduced production. Many of our competitors that report their
results using International Financial Reporting Standards
capitalize their direct costs of annual maintenance downtime.
On average, in the third quarter of 2024,
overall per unit fiber costs increased by approximately 25%
compared to the same quarter of 2023. In the third quarter of 2024
we recorded a $4.0 million non-cash inventory impairment at our
Peace River mill caused by low NBHK pulp prices. Per unit fiber
costs increased relative to the third quarter of 2023 because the
comparative period included the sale and revaluation of previously
impaired inventory. After giving effect to such impairments, per
unit fiber costs in the third quarter of 2024 decreased slightly
compared to the same period of 2023. We currently expect relatively
flat per unit fiber costs in the fourth quarter of 2024.
Solid Wood
| |
Three Months Ended September 30, |
|
| |
2024 |
|
|
2023 |
|
| |
(in thousands) |
|
|
Lumber revenues |
$ |
49,093 |
|
|
$ |
50,815 |
|
| Energy revenues |
$ |
2,593 |
|
|
$ |
5,468 |
|
| Manufactured products
revenues(1) |
$ |
35,798 |
|
|
$ |
20,850 |
|
| Pallet revenues |
$ |
26,525 |
|
|
$ |
28,807 |
|
| Biofuels revenues(2) |
$ |
9,262 |
|
|
$ |
11,387 |
|
| Wood residuals revenues |
$ |
1,822 |
|
|
$ |
2,220 |
|
| Operating loss |
$ |
(14,674 |
) |
|
$ |
(19,690 |
) |
|
______________ |
|
(1) Manufactured products primarily includes
cross-laminated timber ("CLT"), glue-laminated timber ("glulam")
and finger joint lumber. |
|
(2) Biofuels includes pellets and
briquettes. |
| |
In the third quarter of 2024, our solid wood
segment had an operating loss of $14.7 million compared to $19.7
million in the same quarter of 2023 primarily due to the higher
mass timber sales realizations partially offset by lower biofuels
and wood residuals sales realizations.
Solid wood segment revenues in the third quarter
of 2024 increased by approximately 5% to $125.1 million from $119.5
million in the same quarter of 2023 due to higher manufactured
products revenues partially offset by lower revenues from our other
products.
Lumber revenues in the third quarter of 2024
modestly decreased to $49.1 million from $50.8 million in the same
quarter of 2023 primarily as a result of lower sales volumes.
Average lumber sales realizations in the third quarter of 2024
increased to $451 per Mfbm from $443 per Mfbm in the same quarter
of 2023 driven by a modest increase in demand in Europe. In the
U.S. market, realized lumber prices decreased compared to the same
quarter of 2023 due to weak demand. The U.S. market accounted for
approximately 46% of our lumber revenues and approximately 43% of
our lumber sales volumes in the third quarter of 2024. The majority
of the balance of our lumber sales were to Europe.
Lumber sales volumes in the third quarter of
2024 decreased by approximately 5% to 108.8 MMfbm from 114.7 MMfbm
in the same quarter of 2023 as a result of the timing of sales.
In the third quarter of 2024, as a result of the
continued ramp-up of our mass timber business, manufactured
products revenues increased by approximately 71% to $35.8 million
from $20.9 million in the same quarter of 2023. Manufactured
products sales realizations increased to $3,463 per m3 in the third
quarter of 2024 from $1,752 per m3 in the same quarter of 2023 as a
result of higher CLT and glulam sales realizations.
Energy, biofuels and wood residuals revenues in
the third quarter of 2024 decreased by approximately 28% to $13.7
million from $19.1 million in the same quarter of 2023 primarily
due to lower biofuels and wood residuals sales realizations and
lower energy sales volumes.
Pallet revenues in the third quarter of 2024
decreased by approximately 8% to $26.5 million from $28.8 million
in the same quarter of 2023 as a result of lower sales volumes as
weak economic conditions in Europe negatively impacted demand.
Lumber production in the third quarter of 2024
increased by approximately 30% to 122.5 MMfbm from 94.4 MMfbm in
the same quarter of 2023 primarily due to lower planned maintenance
downtime and higher production at our Torgau facility.
Fiber costs were approximately 70% of our lumber
cash production costs in the third quarter of 2024. In the third
quarter of 2024, per unit fiber costs for lumber production were
relatively flat compared to the same quarter of 2023. We currently
expect modestly increasing per unit fiber costs in the fourth
quarter of 2024 due to strong demand.
Consolidated – Nine Months Ended
September 30, 2024 Compared to Nine Months Ended
September 30, 2023
Total revenues for the nine months ended
September 30, 2024 modestly increased to $1,555.0 million from
$1,523.4 million in the same period of 2023 as higher pulp,
manufactured products and lumber sales realizations were mostly
offset by lower sales realizations from our other products and
lower lumber sales volumes.
In the nine months ended September 30, 2024,
costs and expenses included a non-cash loss of $23.6 million in
connection with the dissolution of the CPP joint venture and a
non-cash goodwill impairment of $34.3 million related to the Torgau
facility, which was recognized as a result of ongoing weakness in
lumber, pallet and biofuels markets in Europe stemming from high
interest rates and other economic conditions. We have achieved some
of the planned synergies from the Torgau acquisition and expect to
realize further synergies as market and economic conditions
improve.
Costs and expenses in the nine months ended
September 30, 2024 decreased by approximately 4% to $1,590.3
million from $1,655.7 million in the same period of 2023 primarily
as a result of lower per unit fiber, energy and chemical costs and
lower lumber and pulp sales volumes partially offset by higher
planned maintenance downtime at our pulp mills, the non-cash
goodwill impairment and the non-cash loss on disposal of the CPP
joint venture investment.
In the nine months ended September 30,
2024, Operating EBITDA increased to $144.5 million from negative
Operating EBITDA of $3.7 million in the same period of 2023
primarily as a result of lower per unit fiber and other production
costs and higher pulp, manufactured products and lumber sales
realizations partially offset by lower sales realizations from our
other products and higher planned maintenance downtime at our pulp
mills.
Liquidity
As of September 30, 2024, we had cash and
cash equivalents of $239.0 million, approximately $315.2 million
available under our revolving credit facilities and aggregate
liquidity of about $554.2 million. After giving effect to the
refinancing of our 2026 Senior Notes, we had cash and cash
equivalents of approximately $140.0 million and aggregate liquidity
of about $455.0 million as of September 30, 2024.
The following table is a summary of selected
financial information as of the dates indicated:
| |
September 30, |
|
|
December 31, |
|
| |
2024 |
|
|
2023 |
|
| |
(in thousands) |
|
|
Cash and cash equivalents |
$ |
238,995 |
|
|
$ |
313,992 |
|
| Working capital |
$ |
779,835 |
|
|
$ |
806,468 |
|
| Total assets |
$ |
2,502,599 |
|
|
$ |
2,662,578 |
|
| Long-term liabilities |
$ |
1,706,396 |
|
|
$ |
1,740,731 |
|
| Total shareholders'
equity |
$ |
516,768 |
|
|
$ |
635,410 |
|
| |
|
|
|
|
|
|
|
Quarterly Dividend
A quarterly dividend of $0.075 per share will be
paid on December 26, 2024 to all shareholders of record on December
18, 2024. Future dividends will be subject to Board approval and
may be adjusted as business and industry conditions warrant.
Earnings Release Call
In conjunction with this release, Mercer
International Inc. will host a conference call, which will be
simultaneously broadcast live over the Internet. Management will
host the call, which is scheduled for November 1, 2024 at 10:00 AM
ET. Listeners can access the conference call live and archived for
30 days over the Internet at
https://edge.media-server.com/mmc/p/zp8mydck/ or through a link on
the company's home page at https://www.mercerint.com. Please allow
15 minutes prior to the call to visit the website and download and
install any necessary audio software.
Mercer International Inc. is a global forest
products company with operations in Germany, USA and Canada with
consolidated annual production capacity of 2.1 million tonnes of
pulp, 960 million board feet of lumber, 210 thousand cubic meters
of CLT, 45 thousand cubic meters of glulam, 17 million pallets and
230,000 metric tonnes of biofuels. To obtain further information on
the company, please visit its website at
https://www.mercerint.com.
The preceding includes forward looking
statements which involve known and unknown risks and uncertainties
which may cause our actual results in future periods to differ
materially from forecasted results. Words such as "expects",
"anticipates", "are optimistic that", "projects", "intends",
"designed", "will", "believes", "estimates", "may", "could" and
variations of such words and similar expressions are intended to
identify such forward-looking statements. Among those factors which
could cause actual results to differ materially are the following:
the highly cyclical nature of our business, raw material costs, our
level of indebtedness, competition, foreign exchange and interest
rate fluctuations, our use of derivatives, expenditures for capital
projects, environmental regulation and compliance, disruptions to
our production, market conditions and other risk factors listed
from time to time in our SEC reports.
APPROVED BY: William D. McCartney Chairman (604)
684-1099
Juan Carlos Bueno Chief Executive Officer (604)
684-1099
-FINANCIAL TABLES FOLLOW-
Summary Financial Highlights
| |
Q3 |
|
|
Q2 |
|
|
Q3 |
|
|
YTD |
|
|
YTD |
|
| |
2024 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
| |
(in thousands, except per share amounts) |
|
|
Pulp segment revenues |
$ |
373,268 |
|
|
$ |
367,371 |
|
|
$ |
348,853 |
|
|
$ |
1,173,043 |
|
|
$ |
1,151,948 |
|
|
Solid wood segment revenues |
|
125,093 |
|
|
|
130,238 |
|
|
|
119,547 |
|
|
|
374,354 |
|
|
|
366,611 |
|
|
Corporate and other revenues |
|
3,780 |
|
|
|
1,775 |
|
|
|
2,421 |
|
|
|
7,558 |
|
|
|
4,791 |
|
| Total revenues |
$ |
502,141 |
|
|
$ |
499,384 |
|
|
$ |
470,821 |
|
|
$ |
1,554,955 |
|
|
$ |
1,523,350 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment operating income (loss) |
$ |
25,994 |
|
|
$ |
4,481 |
|
|
$ |
21,181 |
|
|
$ |
47,922 |
|
|
$ |
(49,507 |
) |
|
Solid wood segment operating loss |
|
(14,674 |
) |
|
|
(43,679 |
) |
|
|
(19,690 |
) |
|
|
(72,059 |
) |
|
|
(69,252 |
) |
|
Corporate and other operating loss |
|
(2,479 |
) |
|
|
(4,581 |
) |
|
|
(4,917 |
) |
|
|
(11,249 |
) |
|
|
(13,620 |
) |
| Total operating income
(loss) |
$ |
8,841 |
|
|
$ |
(43,779 |
) |
|
$ |
(3,426 |
) |
|
$ |
(35,386 |
) |
|
$ |
(132,379 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment depreciation and amortization |
$ |
28,651 |
|
|
$ |
27,193 |
|
|
$ |
28,186 |
|
|
$ |
83,217 |
|
|
$ |
83,368 |
|
|
Solid wood segment depreciation and amortization |
|
12,741 |
|
|
|
12,526 |
|
|
|
12,517 |
|
|
|
38,078 |
|
|
|
44,541 |
|
|
Corporate and other depreciation and amortization |
|
222 |
|
|
|
222 |
|
|
|
250 |
|
|
|
664 |
|
|
|
787 |
|
| Total depreciation and
amortization |
$ |
41,614 |
|
|
$ |
39,941 |
|
|
$ |
40,953 |
|
|
$ |
121,959 |
|
|
$ |
128,696 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating EBITDA |
$ |
50,455 |
|
|
$ |
30,439 |
|
|
$ |
37,527 |
|
|
$ |
144,495 |
|
|
$ |
(3,683 |
) |
| Loss on disposal of investment
in joint venture |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
23,645 |
|
|
$ |
— |
|
| Goodwill impairment |
$ |
— |
|
|
$ |
34,277 |
|
|
$ |
— |
|
|
$ |
34,277 |
|
|
$ |
— |
|
| Income tax recovery
(provision) |
$ |
120 |
|
|
$ |
(1,263 |
) |
|
$ |
(3,984 |
) |
|
$ |
5,222 |
|
|
$ |
28,851 |
|
| Net loss |
$ |
(17,559 |
) |
|
$ |
(67,586 |
) |
|
$ |
(25,956 |
) |
|
$ |
(101,848 |
) |
|
$ |
(154,840 |
) |
| Net loss per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.26 |
) |
|
$ |
(1.01 |
) |
|
$ |
(0.39 |
) |
|
$ |
(1.53 |
) |
|
$ |
(2.33 |
) |
|
Diluted |
$ |
(0.26 |
) |
|
$ |
(1.01 |
) |
|
$ |
(0.39 |
) |
|
$ |
(1.53 |
) |
|
$ |
(2.33 |
) |
| Common shares outstanding at
period end |
|
66,871 |
|
|
|
66,871 |
|
|
|
66,525 |
|
|
|
66,871 |
|
|
|
66,525 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Operating Highlights
| |
Q3 |
|
|
Q2 |
|
|
Q3 |
|
|
YTD |
|
|
YTD |
|
| |
2024 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
| Pulp
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pulp production ('000
ADMTs) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
374.4 |
|
|
|
357.8 |
|
|
|
397.5 |
|
|
|
1,185.4 |
|
|
|
1,278.2 |
|
|
NBHK |
|
41.4 |
|
|
|
63.9 |
|
|
|
82.5 |
|
|
|
191.0 |
|
|
|
179.7 |
|
| Annual maintenance downtime
('000 ADMTs) |
|
22.1 |
|
|
|
64.9 |
|
|
|
13.3 |
|
|
|
86.9 |
|
|
|
51.2 |
|
| Annual maintenance downtime
(days) |
|
20 |
|
|
|
37 |
|
|
|
13 |
|
|
|
57 |
|
|
|
48 |
|
| Pulp sales ('000 ADMTs) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
376.2 |
|
|
|
377.6 |
|
|
|
425.1 |
|
|
|
1,242.0 |
|
|
|
1,277.2 |
|
|
NBHK |
|
72.6 |
|
|
|
55.7 |
|
|
|
62.1 |
|
|
|
205.8 |
|
|
|
182.8 |
|
| Average NBSK pulp prices
($/ADMT)(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
1,573 |
|
|
|
1,602 |
|
|
|
1,160 |
|
|
|
1,525 |
|
|
|
1,261 |
|
|
China |
|
771 |
|
|
|
811 |
|
|
|
680 |
|
|
|
776 |
|
|
|
746 |
|
| North America |
|
1,762 |
|
|
|
1,697 |
|
|
|
1,293 |
|
|
|
1,633 |
|
|
|
1,493 |
|
| Average NBHK pulp prices
($/ADMT)(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China |
|
635 |
|
|
|
735 |
|
|
|
530 |
|
|
|
677 |
|
|
|
574 |
|
|
North America |
|
1,467 |
|
|
|
1,437 |
|
|
|
1,023 |
|
|
|
1,376 |
|
|
|
1,274 |
|
| Average pulp sales
realizations ($/ADMT)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
814 |
|
|
|
811 |
|
|
|
666 |
|
|
|
781 |
|
|
|
735 |
|
|
NBHK |
|
632 |
|
|
|
701 |
|
|
|
530 |
|
|
|
650 |
|
|
|
642 |
|
| Energy production ('000
MWh)(3) |
|
509.8 |
|
|
|
493.9 |
|
|
|
524.4 |
|
|
|
1,580.2 |
|
|
|
1,597.4 |
|
| Energy sales ('000
MWh)(3) |
|
187.0 |
|
|
|
185.0 |
|
|
|
214.8 |
|
|
|
592.6 |
|
|
|
619.4 |
|
| Average energy sales
realizations ($/MWh)(3) |
|
86 |
|
|
|
84 |
|
|
|
108 |
|
|
|
86 |
|
|
|
112 |
|
| Solid Wood
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Lumber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production (MMfbm) |
|
122.5 |
|
|
|
111.4 |
|
|
|
94.4 |
|
|
|
360.9 |
|
|
|
350.7 |
|
|
Sales (MMfbm) |
|
108.8 |
|
|
|
116.6 |
|
|
|
114.7 |
|
|
|
346.8 |
|
|
|
388.4 |
|
|
Average sales realizations ($/Mfbm) |
|
451 |
|
|
|
463 |
|
|
|
443 |
|
|
|
458 |
|
|
|
438 |
|
| Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production and sales ('000 MWh) |
|
17.9 |
|
|
|
33.7 |
|
|
|
39.0 |
|
|
|
90.2 |
|
|
|
121.4 |
|
|
Average sales realizations ($/MWh) |
|
145 |
|
|
|
128 |
|
|
|
140 |
|
|
|
130 |
|
|
|
136 |
|
| Manufactured products(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production ('000 cubic meters) |
|
9.8 |
|
|
|
11.1 |
|
|
|
10.9 |
|
|
|
28.1 |
|
|
|
14.9 |
|
|
Sales ('000 cubic meters) |
|
9.9 |
|
|
|
11.2 |
|
|
|
11.0 |
|
|
|
25.0 |
|
|
|
21.4 |
|
|
Average sales realizations ($/cubic meters) |
|
3,463 |
|
|
|
2,942 |
|
|
|
1,752 |
|
|
|
3,260 |
|
|
|
1,672 |
|
| Pallets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production ('000 units) |
|
2,525.5 |
|
|
|
2,547.8 |
|
|
|
2,895.1 |
|
|
|
8,129.7 |
|
|
|
8,522.5 |
|
|
Sales ('000 units) |
|
2,446.7 |
|
|
|
2,570.4 |
|
|
|
2,765.3 |
|
|
|
7,933.4 |
|
|
|
8,590.4 |
|
|
Average sales realizations ($/unit) |
|
11 |
|
|
|
10 |
|
|
|
10 |
|
|
|
10 |
|
|
|
11 |
|
| Biofuels(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production ('000 tonnes) |
|
40.6 |
|
|
|
41.0 |
|
|
|
52.1 |
|
|
|
119.6 |
|
|
|
128.3 |
|
|
Sales ('000 tonnes) |
|
43.5 |
|
|
|
40.4 |
|
|
|
38.7 |
|
|
|
132.1 |
|
|
|
105.0 |
|
|
Average sales realizations ($/tonne) |
|
213 |
|
|
|
202 |
|
|
|
294 |
|
|
|
217 |
|
|
|
284 |
|
| Average Spot Currency
Exchange Rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ / €(6) |
|
1.0987 |
|
|
|
1.0766 |
|
|
|
1.0884 |
|
|
|
1.0870 |
|
|
|
1.0835 |
|
| $ / C$(6) |
|
0.7331 |
|
|
|
0.7310 |
|
|
|
0.7458 |
|
|
|
0.7352 |
|
|
|
0.7433 |
|
|
______________ |
|
(1) Source: RISI pricing report. Europe and
North America are list prices. China are net prices which include
discounts, allowances and rebates. |
|
(2) Sales realizations after customer
discounts, rebates and other selling concessions. Incorporates the
effect of pulp price variations occurring between the order and
shipment dates. |
|
(3) Does not include our 50% joint venture
interest in the CPP mill, which is accounted for using the equity
method. In the first quarter of 2024, we disposed of our investment
in CPP. |
|
(4) Manufactured products includes CLT,
glulam and finger joint lumber. |
|
(5) Biofuels includes pellets and
briquettes. |
|
(6) Average Federal Reserve Bank of New York
Noon Buying Rates over the reporting period. |
|
MERCER INTERNATIONAL INC.INTERIM CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In thousands, except per share
data) |
| |
| |
|
Three Months
EndedSeptember 30, |
|
|
Nine Months
EndedSeptember 30, |
|
| |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Revenues |
|
$ |
502,141 |
|
|
$ |
470,821 |
|
|
$ |
1,554,955 |
|
|
$ |
1,523,350 |
|
| Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales, excluding depreciation and amortization |
|
|
422,598 |
|
|
|
403,267 |
|
|
|
1,320,000 |
|
|
|
1,430,805 |
|
|
Cost of sales depreciation and amortization |
|
|
41,546 |
|
|
|
40,884 |
|
|
|
121,773 |
|
|
|
128,485 |
|
|
Selling, general and administrative expenses |
|
|
29,156 |
|
|
|
30,096 |
|
|
|
90,646 |
|
|
|
96,439 |
|
|
Loss on disposal of investment in joint venture |
|
|
— |
|
|
|
— |
|
|
|
23,645 |
|
|
|
— |
|
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
34,277 |
|
|
|
— |
|
| Operating income (loss) |
|
|
8,841 |
|
|
|
(3,426 |
) |
|
|
(35,386 |
) |
|
|
(132,379 |
) |
| Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(26,429 |
) |
|
|
(21,863 |
) |
|
|
(80,831 |
) |
|
|
(61,001 |
) |
|
Other income (expenses) |
|
|
(91 |
) |
|
|
3,317 |
|
|
|
9,147 |
|
|
|
9,689 |
|
| Total other expenses, net |
|
|
(26,520 |
) |
|
|
(18,546 |
) |
|
|
(71,684 |
) |
|
|
(51,312 |
) |
| Loss before income taxes |
|
|
(17,679 |
) |
|
|
(21,972 |
) |
|
|
(107,070 |
) |
|
|
(183,691 |
) |
| Income tax recovery
(provision) |
|
|
120 |
|
|
|
(3,984 |
) |
|
|
5,222 |
|
|
|
28,851 |
|
| Net loss |
|
$ |
(17,559 |
) |
|
$ |
(25,956 |
) |
|
$ |
(101,848 |
) |
|
$ |
(154,840 |
) |
| Net loss per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.26 |
) |
|
$ |
(0.39 |
) |
|
$ |
(1.53 |
) |
|
$ |
(2.33 |
) |
|
Diluted |
|
$ |
(0.26 |
) |
|
$ |
(0.39 |
) |
|
$ |
(1.53 |
) |
|
$ |
(2.33 |
) |
| Dividends declared per common
share |
|
$ |
0.075 |
|
|
$ |
0.075 |
|
|
$ |
0.225 |
|
|
$ |
0.225 |
|
|
MERCER INTERNATIONAL INC.INTERIM CONSOLIDATED BALANCE
SHEETS(Unaudited)(In thousands, except share and per share
data) |
|
|
| |
|
September 30, |
|
|
December 31, |
|
| |
|
2024 |
|
|
2023 |
|
| ASSETS |
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
238,995 |
|
|
$ |
313,992 |
|
|
Accounts receivable, net |
|
|
352,548 |
|
|
|
306,166 |
|
|
Inventories |
|
|
392,144 |
|
|
|
414,161 |
|
|
Prepaid expenses and other |
|
|
41,460 |
|
|
|
23,461 |
|
|
Assets classified as held for sale |
|
|
34,123 |
|
|
|
35,125 |
|
| Total current assets |
|
|
1,059,270 |
|
|
|
1,092,905 |
|
|
Property, plant and equipment, net |
|
|
1,360,118 |
|
|
|
1,409,937 |
|
|
Investment in joint ventures |
|
|
3,598 |
|
|
|
41,665 |
|
|
Amortizable intangible assets, net |
|
|
54,713 |
|
|
|
52,641 |
|
|
Goodwill |
|
|
— |
|
|
|
35,381 |
|
|
Operating lease right-of-use assets |
|
|
8,715 |
|
|
|
11,725 |
|
|
Pension asset |
|
|
5,534 |
|
|
|
5,588 |
|
|
Other long-term assets |
|
|
10,651 |
|
|
|
12,736 |
|
| Total assets |
|
$ |
2,502,599 |
|
|
$ |
2,662,578 |
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
Accounts payable and other |
|
$ |
271,658 |
|
|
$ |
278,986 |
|
|
Pension and other post-retirement benefit obligations |
|
|
809 |
|
|
|
826 |
|
|
Liabilities associated with assets held for sale |
|
|
6,968 |
|
|
|
6,625 |
|
| Total current liabilities |
|
|
279,435 |
|
|
|
286,437 |
|
|
Long-term debt |
|
|
1,597,884 |
|
|
|
1,609,425 |
|
|
Pension and other post-retirement benefit obligations |
|
|
12,750 |
|
|
|
12,483 |
|
|
Operating lease liabilities |
|
|
5,388 |
|
|
|
7,755 |
|
|
Other long-term liabilities |
|
|
13,648 |
|
|
|
13,744 |
|
|
Deferred income tax |
|
|
76,726 |
|
|
|
97,324 |
|
| Total liabilities |
|
|
1,985,831 |
|
|
|
2,027,168 |
|
| Shareholders’ equity |
|
|
|
|
|
|
|
Common shares $1 par value; 200,000,000 authorized; 66,871,000
issued and outstanding (2023 – 66,525,000) |
|
|
66,850 |
|
|
|
66,471 |
|
|
Additional paid-in capital |
|
|
363,813 |
|
|
|
359,497 |
|
|
Retained earnings |
|
|
219,221 |
|
|
|
336,113 |
|
|
Accumulated other comprehensive loss |
|
|
(133,116 |
) |
|
|
(126,671 |
) |
| Total shareholders’
equity |
|
|
516,768 |
|
|
|
635,410 |
|
| Total liabilities and
shareholders’ equity |
|
$ |
2,502,599 |
|
|
$ |
2,662,578 |
|
|
MERCER INTERNATIONAL INC.INTERIM CONSOLIDATED STATEMENTS OF
CASH FLOWS(Unaudited)(In thousands) |
|
|
| |
|
Three Months
EndedSeptember 30, |
|
|
Nine Months
EndedSeptember 30, |
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
| Cash flows from (used in)
operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(17,559 |
) |
|
$ |
(25,956 |
) |
|
$ |
(101,848 |
) |
|
$ |
(154,840 |
) |
|
Adjustments to reconcile net loss to cash flows from operating
activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
41,614 |
|
|
|
40,953 |
|
|
|
121,959 |
|
|
|
128,696 |
|
|
Deferred income tax provision (recovery) |
|
|
(14,403 |
) |
|
|
9,520 |
|
|
|
(20,507 |
) |
|
|
(34,529 |
) |
|
Inventory impairment (recovery) |
|
|
4,000 |
|
|
|
(10,000 |
) |
|
|
4,000 |
|
|
|
56,600 |
|
|
Loss on disposal of investment in joint venture |
|
|
— |
|
|
|
— |
|
|
|
23,645 |
|
|
|
— |
|
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
34,277 |
|
|
|
— |
|
|
Defined benefit pension plans and other post-retirement benefit
plan expense |
|
|
317 |
|
|
|
621 |
|
|
|
958 |
|
|
|
1,518 |
|
|
Stock compensation expense |
|
|
1,420 |
|
|
|
1,754 |
|
|
|
4,852 |
|
|
|
4,367 |
|
|
Foreign exchange transaction losses (gains) |
|
|
6,095 |
|
|
|
(4,830 |
) |
|
|
(736 |
) |
|
|
(4,336 |
) |
|
Other |
|
|
874 |
|
|
|
459 |
|
|
|
2,990 |
|
|
|
(6,142 |
) |
|
Defined benefit pension plans and other post-retirement benefit
plan contributions |
|
|
(341 |
) |
|
|
(251 |
) |
|
|
(958 |
) |
|
|
(1,816 |
) |
|
Changes in working capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
860 |
|
|
|
65,592 |
|
|
|
(40,940 |
) |
|
|
89,102 |
|
|
Inventories |
|
|
20,639 |
|
|
|
8,543 |
|
|
|
25,234 |
|
|
|
(19,011 |
) |
|
Accounts payable and accrued expenses |
|
|
(43,527 |
) |
|
|
(100,449 |
) |
|
|
(25,419 |
) |
|
|
(107,630 |
) |
|
Other |
|
|
(13,934 |
) |
|
|
(11,290 |
) |
|
|
(8,461 |
) |
|
|
(12,265 |
) |
|
Net cash from (used in) operating activities |
|
|
(13,945 |
) |
|
|
(25,334 |
) |
|
|
19,046 |
|
|
|
(60,286 |
) |
| Cash flows from (used in)
investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(27,264 |
) |
|
|
(37,391 |
) |
|
|
(63,608 |
) |
|
|
(110,302 |
) |
|
Proceeds on sale of property, plant and equipment |
|
|
3,665 |
|
|
|
1,040 |
|
|
|
5,210 |
|
|
|
3,172 |
|
|
Acquisition, net of cash acquired |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(82,100 |
) |
|
Property insurance proceeds |
|
|
773 |
|
|
|
2,727 |
|
|
|
773 |
|
|
|
5,437 |
|
|
Proceeds from government grants |
|
|
— |
|
|
|
4,642 |
|
|
|
787 |
|
|
|
4,642 |
|
|
Other |
|
|
(77 |
) |
|
|
(324 |
) |
|
|
(3,703 |
) |
|
|
(531 |
) |
|
Net cash from (used in) investing activities |
|
|
(22,903 |
) |
|
|
(29,306 |
) |
|
|
(60,541 |
) |
|
|
(179,682 |
) |
| Cash flows from (used in)
financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of senior notes |
|
|
— |
|
|
|
200,000 |
|
|
|
— |
|
|
|
200,000 |
|
|
Proceeds from (repayment of) revolving credit facilities, net |
|
|
20,330 |
|
|
|
(3,129 |
) |
|
|
(15,510 |
) |
|
|
51,278 |
|
|
Dividend payments |
|
|
(5,015 |
) |
|
|
(4,989 |
) |
|
|
(10,029 |
) |
|
|
(9,971 |
) |
|
Payment of debt issuance costs |
|
|
— |
|
|
|
(4,552 |
) |
|
|
— |
|
|
|
(4,552 |
) |
|
Payment of finance lease obligations |
|
|
(2,564 |
) |
|
|
(2,058 |
) |
|
|
(7,440 |
) |
|
|
(5,845 |
) |
|
Other |
|
|
(23 |
) |
|
|
(114 |
) |
|
|
(752 |
) |
|
|
(343 |
) |
|
Net cash from (used in) financing activities |
|
|
12,728 |
|
|
|
185,158 |
|
|
|
(33,731 |
) |
|
|
230,567 |
|
| Effect of exchange rate
changes on cash and cash equivalents |
|
|
(58 |
) |
|
|
(131 |
) |
|
|
229 |
|
|
|
(906 |
) |
| Net increase (decrease) in
cash and cash equivalents |
|
|
(24,178 |
) |
|
|
130,387 |
|
|
|
(74,997 |
) |
|
|
(10,307 |
) |
| Cash and cash equivalents,
beginning of period |
|
|
263,173 |
|
|
|
213,338 |
|
|
|
313,992 |
|
|
|
354,032 |
|
| Cash and cash equivalents, end
of period |
|
$ |
238,995 |
|
|
$ |
343,725 |
|
|
$ |
238,995 |
|
|
$ |
343,725 |
|
|
MERCER INTERNATIONAL INC.COMPUTATION OF
OPERATING EBITDA(Unaudited)(In
thousands) |
|
|
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 relative to its competitors. Management considers it to
be a meaningful supplement to operating income (loss) as a
performance measure primarily because depreciation expense and
non-recurring capital asset impairment charges are not an actual
cash cost, and depreciation expense varies widely from company to
company in a manner that management considers largely independent
of the underlying cost efficiency of our operating facilities. In
addition, management believes Operating EBITDA is commonly used by
securities analysts, investors and other interested parties to
evaluate our financial performance.
Operating EBITDA does not reflect the impact of
a number of items that affect our net loss, including financing
costs and the effect of derivative instruments. Operating EBITDA is
not a measure of financial performance under GAAP, and should not
be considered as an alternative to net loss or operating income
(loss) as a measure of performance, nor as an alternative to net
cash from (used in) operating activities as a measure of liquidity.
Operating EBITDA is an internal measure and therefore may not be
comparable to other companies.
The following table sets forth a reconciliation
of net loss to Operating EBITDA for the periods indicated:
|
|
Q3 |
|
|
Q2 |
|
|
Q3 |
|
|
YTD |
|
|
YTD |
|
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Net loss |
$ |
(17,559 |
) |
|
$ |
(67,586 |
) |
|
$ |
(25,956 |
) |
|
$ |
(101,848 |
) |
|
$ |
(154,840 |
) |
| Income tax provision
(recovery) |
|
(120 |
) |
|
|
1,263 |
|
|
|
3,984 |
|
|
|
(5,222 |
) |
|
|
(28,851 |
) |
| Interest expense |
|
26,429 |
|
|
|
26,843 |
|
|
|
21,863 |
|
|
|
80,831 |
|
|
|
61,001 |
|
| Other expenses (income) |
|
91 |
|
|
|
(4,299 |
) |
|
|
(3,317 |
) |
|
|
(9,147 |
) |
|
|
(9,689 |
) |
| Operating income (loss) |
|
8,841 |
|
|
|
(43,779 |
) |
|
|
(3,426 |
) |
|
|
(35,386 |
) |
|
|
(132,379 |
) |
| Add: Depreciation and
amortization |
|
41,614 |
|
|
|
39,941 |
|
|
|
40,953 |
|
|
|
121,959 |
|
|
|
128,696 |
|
| Add: Loss on disposal of
investment in joint venture |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23,645 |
|
|
|
— |
|
| Add: Goodwill impairment |
|
— |
|
|
|
34,277 |
|
|
|
— |
|
|
|
34,277 |
|
|
|
— |
|
| Operating EBITDA |
$ |
50,455 |
|
|
$ |
30,439 |
|
|
$ |
37,527 |
|
|
$ |
144,495 |
|
|
$ |
(3,683 |
) |
Mercer (NASDAQ:MERC)
Historical Stock Chart
From Nov 2024 to Dec 2024
Mercer (NASDAQ:MERC)
Historical Stock Chart
From Dec 2023 to Dec 2024
