Mercer International Inc. (Nasdaq:MERC) (TSX:MERC.U) today reported
strong results for the fourth quarter and year ended December 31,
2016. Operating EBITDA* in the fourth quarter of 2016 was $57.8
million, compared to $61.5 million in the fourth quarter of 2015
and $47.9 million in the prior quarter of 2016. For 2016, Operating
EBITDA was $185.7 million, compared to $234.0 million for 2015.
For the fourth quarter of 2016, our net income
was $18.5 million, or $0.29 per basic and $0.28 per diluted share,
compared to $21.7 million, or $0.34 per basic and $0.33 per diluted
share, in the fourth quarter of 2015 and $11.9 million, or $0.18
per basic and diluted share, in the prior quarter of 2016. For
2016, net income was $34.9 million, or $0.54 per basic and diluted
share, compared to $75.5 million, or $1.17 per basic and diluted
share, in 2015.
|
|
|
|
|
|
|
Summary
Financial Highlights |
|
|
|
|
|
|
|
|
Q4 |
Q3 |
Q4 |
Year |
Year |
|
|
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
(in millions, except per share
amounts) |
Pulp revenues |
|
$ |
202.8 |
|
$ |
215.8 |
|
$ |
216.3 |
|
$ |
847.3 |
|
$ |
946.2 |
|
Energy and chemical
revenues |
|
$ |
18.9 |
|
$ |
22.1 |
|
$ |
21.5 |
|
$ |
84.3 |
|
$ |
87.0 |
|
Operating income |
|
$ |
39.0 |
|
$ |
29.8 |
|
$ |
44.2 |
|
$ |
113.7 |
|
$ |
165.7 |
|
Operating EBITDA* |
|
$ |
57.8 |
|
$ |
47.9 |
|
$ |
61.5 |
|
$ |
185.7 |
|
$ |
234.0 |
|
Foreign exchange loss
on intercompany debt |
|
$ |
(1.4 |
) |
$ |
‑ |
|
$ |
(0.9 |
) |
$ |
(1.1 |
) |
$ |
(5.3 |
) |
Gain (loss) on
derivative instruments |
|
$ |
‑ |
|
$ |
‑ |
|
$ |
(0.2 |
) |
$ |
(0.2 |
) |
$ |
(0.9 |
) |
Income tax
provision |
|
$ |
(5.3 |
) |
$ |
(5.1 |
) |
$ |
(7.7 |
) |
$ |
(24.5 |
) |
$ |
(29.4 |
) |
Net income |
|
$ |
18.5 |
|
$ |
11.9 |
|
$ |
21.7 |
|
$ |
34.9 |
|
$ |
75.5 |
|
Net income per
share |
|
|
|
|
|
|
Basic |
|
$ |
0.29 |
|
$ |
0.18 |
|
$ |
0.34 |
|
$ |
0.54 |
|
$ |
1.17 |
|
Diluted |
|
$ |
0.28 |
|
$ |
0.18 |
|
$ |
0.33 |
|
$ |
0.54 |
|
$ |
1.17 |
|
Common shares
outstanding at period end |
|
|
64.7 |
|
|
64.7 |
|
|
64.5 |
|
|
64.7 |
|
|
64.5 |
|
Summary
Operating Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
Q4 |
|
Q3 |
|
Q4 |
|
Year |
|
Year |
|
|
2016 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Pulp production ('000
ADMTs) |
|
350.3 |
|
361.8 |
|
367.0 |
|
1,428.4 |
|
1,458.0 |
Annual maintenance
downtime ('000 ADMTs) |
|
21.6 |
|
10.2 |
|
7.5 |
|
61.4 |
|
58.4 |
Annual maintenance
downtime (days) |
|
12 |
|
10 |
|
4 |
|
43 |
|
40 |
Pulp sales ('000
ADMTs) |
|
345.1 |
|
359.8 |
|
351.9 |
|
1,428.7 |
|
1,463.1 |
Average NBSK pulp list
price in Europe ($/ADMT)(1) |
|
810 |
|
810 |
|
817 |
|
803 |
|
850 |
Average NBSK pulp list
price in China ($/ADMT)(1) |
|
595 |
|
595 |
|
600 |
|
599 |
|
643 |
Average NBSK pulp list
price in North America ($/ADMT)(1) |
|
992 |
|
998 |
|
945 |
|
978 |
|
972 |
Average pulp sales
realizations ($/ADMT)(2) |
|
580 |
|
593 |
|
609 |
|
586 |
|
640 |
Energy production ('000
MWh) |
|
431.8 |
|
473.8 |
|
465.9 |
|
1,812.6 |
|
1,846.8 |
Surplus energy sales
('000 MWh) |
|
179.9 |
|
208.4 |
|
204.4 |
|
785.8 |
|
815.0 |
Average energy sales
realizations ($/MWh) |
|
93 |
|
92 |
|
92 |
|
91 |
|
92 |
Average Spot Currency
Exchange Rates: |
|
|
|
|
|
|
|
|
|
|
$ /
€(3) |
|
1.0780 |
|
1.1163 |
|
1.0954 |
|
1.1072 |
|
1.1096 |
$ /
C$(3) |
|
0.7496 |
|
0.7663 |
|
0.7487 |
|
0.7558 |
|
0.7830 |
_________________________(1) Source:
RISI pricing report.(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) Average Federal Reserve Bank of New York
Noon Buying Rates over the reporting
period._________________________* 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 4 of the financial tables included in
this press release for a reconciliation of net income to Operating
EBITDA.
President's Comments
Mr. David M. Gandossi, the Chief Executive
Officer, stated: "We are generally pleased with our performance and
results for 2016 as:
- we achieved strong operating performance and generated $185.7
million in Operating EBITDA and $34.9 million in net income;
- we continued to strengthen our balance sheet and increased our
cash position to $136.6 million from $99.6 million and our working
capital to $308.7 million from $284.4 million, respectively, from
the start of the year;
- overall, per unit fiber costs decreased by approximately 8% at
our mills compared to 2015, primarily as a result of a balanced
wood market and strong sawmilling activity in both Germany and the
Celgar mill's fiber basket combined with steady progress on several
cost reduction initiatives;
- our Board authorized a quarterly cash dividend of $0.115 per
share and we returned approximately $29.7 million to our
shareholders over the course of the year; and
- we continued to reduce indebtedness and future debt service
costs through the repurchase and cancellation of $23 million of our
7.0% senior notes due 2019 and, in January 2017, we announced the
redemption of our remaining 7.0% senior notes with the proceeds of
an issuance of $225 million 6.5% senior notes due 2024 and cash on
hand."
Mr. Gandossi continued: "As our operating costs
are primarily incurred in euros and Canadian dollars and our
principal product, NBSK pulp, is quoted in dollars, our business
and operating margins materially benefit from the current strength
of the dollar. However, our energy and chemical sales are made in
local currencies and our realizations decline in dollar terms when
the dollar strengthens.
At the end of 2016, list pulp prices in Europe
were approximately $810 per ADMT, while list prices in China and
North America were approximately $605 and $990 per ADMT,
respectively. Such prices in China included a price increase of $20
per ADMT, effective December 1, 2016. In addition, NBSK pulp
producers implemented a further $20 increase in China, effective
January 1, 2017. NBSK pulp producers also implemented a $10 per
ADMT price increase in Europe, effective January 1, 2017, which
will only have a negligible effect on our revenues because of
selling and other concessions. Although NBSK pulp prices have
improved recently, there can be no assurance that they will not
decline in the future as pulp is a commodity and prices are highly
cyclical.
At year end, world producer inventories of NBSK
pulp were generally balanced at about 32 days' supply."
Mr. Gandossi continued: "During the current
quarter, we moved forward high return projects to improve our
operational efficiencies, including projects that improve our
operational reliability and de-bottleneck certain processes. We
also continued to focus on certain high value fiber logistics
projects in Germany which have further reduced our fiber costs and
exposure to fiber supply risks.
In the current quarter, we had 12 days
(approximately 21,600 ADMTs) of annual maintenance downtime at our
Stendal mill which included approximately $9.6 million in direct
costs, compared to four days in the comparative quarter of 2015.
Overall in 2016, we had 43 days (approximately 61,400 ADMTs) of
annual maintenance downtime, which included approximately $29.8
million in direct costs, compared to 40 days in 2015. Many of our
competitors who report their financial results using International
Financial Reporting Standards ("IFRS") capitalize their direct
costs of annual maintenance downtime."
Mr. Gandossi concluded: "Currently, the NBSK
market fundamentals are generally positive and we currently expect
demand to remain steady in the first quarter of 2017, as supply and
demand fundamentals are strong and customer inventories continue to
be at normal levels. We have announced $20 per ADMT price increases
in both China and Europe for effect February 1, 2017. However, the
continuing strength of the dollar may continue to pressure pulp
prices."
Quarterly DividendA quarterly
dividend of $0.115 per common share will be paid on April 4, 2017
to all shareholders of record on March 28, 2017. Future dividends
will be subject to Board approval and may be adjusted as business
and industry conditions warrant.
Three Months Ended December 31, 2016
Compared to Three Months Ended December 31, 2015Total
revenues for the three months ended December 31, 2016 decreased by
approximately 7% to $221.7 million from $237.8 million in the same
quarter of 2015, primarily as a result of lower pulp sales
realizations and lower pulp and energy sales volumes.
Pulp revenues in the fourth quarter of 2016
decreased by approximately 6% to $202.8 million from $216.3 million
in the same quarter of 2015, due to lower pulp sales realizations
and lower sales volumes.
Energy and chemical revenues in the fourth
quarter of 2016 decreased by approximately 12% to $18.9 million
from $21.5 million in the same quarter of 2015, primarily due to
lower sales volumes as a result of our Stendal mill's scheduled
maintenance.
Pulp production decreased by approximately 5% to
350,327 ADMTs in the current quarter from 367,010 ADMTs in the same
quarter of 2015. In the current quarter, we had an aggregate of 12
days (approximately 21,600 ADMTs) of annual maintenance downtime at
our Stendal mill compared to four days (approximately 7,500 ADMTs)
in the comparative quarter of 2015.
We estimate that annual maintenance downtime in
the current quarter adversely impacted our Operating EBITDA by
approximately $11.2 million, comprised of approximately $9.6
million in direct out-of-pocket expenses and the balance in reduced
production and other costs. Many of our competitors that report
their financial results using IFRS capitalize their direct costs of
maintenance downtime.
Pulp sales volumes decreased by approximately 2%
to 345,102 ADMTs in the current quarter from 351,875 ADMTs in the
same quarter of 2015, primarily due to the impact of lower
production.
In the current quarter of 2016, list prices for
NBSK pulp in Europe and China declined from the same quarter of
2015, largely as a result of the strong dollar. Average list prices
for NBSK pulp in Europe were approximately $810 per ADMT in the
fourth quarter of 2016, compared to approximately $817 per ADMT in
the same quarter of 2015. Average list prices for NBSK pulp in
China and North America were approximately $595 per ADMT and $992
per ADMT, respectively, in the fourth quarter of 2016, compared to
approximately $600 per ADMT and $945 per ADMT, respectively, in the
same quarter of 2015.
Average pulp sales realizations decreased by
approximately 5% to $580 per ADMT in the fourth quarter of 2016
from approximately $609 per ADMT in the same quarter last year,
primarily due to lower list prices largely resulting from the
overall strength of the dollar, which increases the cost of pulp
for our customers primarily in Europe and China.
In the fourth quarter of 2016, the impact of
changes in the exchange rates for the dollar to the euro and the
Canadian dollar on our dollar-denominated cash balances and
receivables held at the mills increased our operating income and
contributed to the positive impact due to foreign exchange of
approximately $3.1 million when compared to the same quarter
of 2015.
Costs and expenses in the current quarter
decreased by approximately 6% to $182.6 million from $193.7 million
in the fourth quarter of 2015, primarily due to the reversal of an
accrual for wastewater fees at our Stendal mill of $13.6 million
and lower fiber prices, partially offset by higher maintenance
costs. Our costs and expenses in the fourth quarter of 2015
included a recovery of a utility claim of $6.1 million.
In the fourth quarter of 2016, operating
depreciation and amortization was $18.7 million, compared to $17.2
million in the same quarter of 2015.
Selling, general and administrative expenses
increased to $12.4 million in the fourth quarter of 2016 from $10.7
million in the same quarter of 2015 due to higher stock
compensation expense and spending on strategic activities.
Transportation costs increased by approximately
2% to $17.3 million in the current quarter from $17.0 million in
the same quarter of 2015 primarily due to higher sales to
China.
On average, in the current quarter, overall per
unit fiber costs decreased by approximately 11% from the same
quarter of 2015, primarily as a result of a balanced wood market
and strong sawmilling activity in both Germany and the Celgar
mill's fiber basket. In the current quarter, per unit fiber costs
in Germany were approximately 11% lower than the comparative
quarter of 2015. In the current quarter, per unit fiber costs for
our Celgar mill were 5% lower than the comparative quarter of
2015.
In the fourth quarter of 2016, our operating
income decreased to $39.0 million from $44.2 million in the same
quarter of 2015, primarily as a result of lower pulp sales
realizations and lower sales volumes resulting from higher
maintenance downtime, partially offset by lower costs resulting
from a strong dollar and the reversal of accruals for wastewater
fees of $13.6 million. Operating income in the fourth quarter of
2015 included a recovery of a utility claim of $6.1 million.
Interest expense in the current quarter
decreased to $12.9 million from $13.3 million in the same quarter
of 2015, primarily as a result of lower indebtedness.
During the fourth quarter of 2016, income tax
expense decreased to $5.3 million from $7.7 million in the same
quarter of 2015.
For the fourth quarter of 2016, we had net
income of $18.5 million, or $0.29 per basic and $0.28 per diluted
share, compared to net income of $21.7 million, or $0.34 per basic
and $0.33 per diluted share, in the same quarter of 2015.
In the fourth quarter of 2016, Operating EBITDA
decreased by approximately 6% to $57.8 million from $61.5 million
in the same quarter of 2015, primarily due to lower pulp sales
realizations and lower sales volumes resulting from higher
maintenance downtime, partially offset by the reversal of accruals
for wastewater fees of $13.6 million. In the fourth quarter of
2015, Operating EBITDA included a recovery of a utility claim of
$6.1 million.
Year Ended December 31, 2016 Compared to
Year Ended December 31, 2015Total revenues in 2016
decreased by approximately 10% to $931.6 million from $1,033.2
million in 2015.
Pulp revenues in 2016 decreased by approximately
10% to $847.3 million from $946.2 million in 2015, due to lower
pulp sales realizations and sales volumes.
Energy and chemical revenues decreased by
approximately 3% to $84.3 million in 2016 from $87.0 million in
2015, primarily due to lower sales volumes.
Pulp production decreased by approximately 2% to
1,428,384 ADMTs in 2016 from 1,457,973 ADMTs in 2015. In 2016, we
had annual maintenance downtime of a total of 43 days
(approximately 61,400 ADMTs), 37 days of which were scheduled and
six days of which were unscheduled to effect additional work at our
Celgar mill. In 2015, we had scheduled annual maintenance downtime
of 40 days (approximately 58,400 ADMTs). In 2017, we currently
estimate taking an aggregate of 36 days of maintenance downtime at
our mills.
We estimate that such maintenance downtime in
2016 adversely impacted our Operating EBITDA by approximately $38.4
million, comprised of approximately $29.8 million in direct
out-of-pocket expenses and the balance in reduced production. Many
of our competitors that report their financial results using IFRS
capitalize their direct costs of maintenance downtime.
Pulp sales volumes marginally decreased by
approximately 2% to 1,428,672 ADMTs in 2016 from 1,463,132 ADMTs in
2015, primarily due to lower production at our Celgar mill due to
an extended shut and subsequent slow start up at the mill.
In 2016, list prices for NBSK pulp declined from
2015, largely as a result of the strong dollar and the impact of
weakening hardwood pulp prices on NBSK pricing. Average list prices
for NBSK pulp in Europe were approximately $803 per ADMT, compared
to approximately $850 per ADMT in 2015. Average list prices for
NBSK pulp in China and North America were approximately $599 per
ADMT and $978 per ADMT, respectively, in 2016, compared to
approximately $643 per ADMT and $972 per ADMT, respectively, in
2015.
Average pulp sales realizations decreased by
approximately 8% to $586 per ADMT in 2016 from approximately $640
per ADMT in 2015, primarily due to lower list prices.
In 2016, the dollar was flat against the euro
and 3% stronger against the Canadian dollar compared to 2015, which
had a positive impact on our Canadian dollar denominated costs and
expenses. However, this was more than offset by the negative impact
of a weaker dollar at year end on our Celgar mill's
dollar-denominated cash balances and receivables, resulting in an
overall negative impact of approximately $1.8 million in 2016
compared to 2015.
Costs and expenses in 2016 decreased by
approximately 6% to $817.9 million from $867.5 million in 2015,
primarily due to lower fiber prices, lower sales volumes and the
reversal of $20.8 million in accrued wastewater fees at our German
mills.
In 2016, operating depreciation and amortization
increased by approximately 5% to $71.5 million from $67.8 million
in 2015.
Selling, general and administrative expenses
decreased by approximately 4% to $44.5 million in 2016 from $46.2
million in 2015, due to lower costs associated with our completed
NAFTA claim.
Transportation costs decreased to $68.1 million
in 2016 from $74.4 million in 2015, primarily due to lower pulp
shipments to China.
On average, our overall per unit fiber costs in
2016 decreased by approximately 8% from 2015, primarily as a result
of a balanced wood market in Germany and the Celgar mill's fiber
basket. In 2016, our per unit fiber costs in Germany were 9% lower
than in 2015. In 2016, our Celgar mill's per unit fiber costs were
approximately 6% lower than in 2015, due to strong sawmilling
activity in the Celgar mill's fiber basket. In 2017, we currently
expect our overall per unit fiber costs to be generally flat,
largely as a result of a continuation of balanced market conditions
in both markets.
In 2016, our operating income decreased to
$113.7 million from $165.7 million in 2015, primarily due to lower
pulp sales realizations and sales volumes, partially offset by
lower per unit fiber costs and the reversal of wastewater fee
accruals at our German mills.
Interest expense in 2016 decreased by
approximately 4% to $51.6 million from $53.9 million in 2015,
primarily due to lower indebtedness.
In 2016, we recorded a derivative loss of $0.2
million on the mark to market adjustment of our Stendal mill's
interest rate derivative, compared to a derivative loss of $0.9
million in 2015.
During 2016, as a result of the strengthening of
the dollar versus the euro at the end of 2016, we recorded a
non-cash loss on the foreign exchange translation of inter-company
debt between Mercer Inc. and its wholly-owned subsidiaries of $1.1
million, compared to $5.3 million in 2015.
During 2016, we recorded an income tax expense
of $24.5 million, compared to an income tax expense of $29.4
million in 2015. The effective tax rate for 2016 was 41%, compared
to an effective tax rate of 28% in 2015.
We had net income of $34.9 million, or $0.54 per
basic and diluted share, in 2016. In 2015, net income was $75.5
million, or $1.17 per basic and diluted share.
In 2016, Operating EBITDA decreased by 21% to
$185.7 million from $234.0 million in 2015, primarily as a result
of lower pulp sales realizations and sales volumes, only being
partially offset by lower fiber prices and the reversal of
wastewater fee accruals at our German mills.
Liquidity and Capital
ResourcesThe following table is a summary of our cash
flows for the periods indicated:
|
Year Ended December 31, |
|
|
2016 |
|
|
2015 |
|
|
(in thousands) |
Net cash from operating
activities |
$ |
140,782 |
|
$ |
159,220 |
|
Net cash used in
investing activities |
|
(44,303 |
) |
|
(49,817 |
) |
Net cash used in
financing activities |
|
(62,377 |
) |
|
(56,664 |
) |
Effect of exchange rate
on changes in cash, cash equivalents and restricted cash |
|
(2,065 |
) |
|
(7,338 |
) |
Net increase in cash,
cash equivalents and restricted cash |
$ |
32,037 |
|
$ |
45,401 |
|
|
The following table is a summary of selected
financial information as at the dates indicated:
|
|
Year Ended December 31, |
|
|
|
2016 |
|
2015 |
|
|
(in thousands) |
Financial
Position |
|
|
|
Cash and cash
equivalents |
|
$ |
136,569 |
$ |
99,629 |
Working capital |
|
$ |
308,681 |
$ |
284,390 |
Total assets |
|
$ |
1,158,708 |
$ |
1,182,817 |
Long-term
liabilities |
|
$ |
686,410 |
$ |
695,420 |
Total equity |
|
$ |
379,128 |
$ |
382,976 |
As at December 31, 2016, we had approximately
$132.7 million available under our revolving credit facilities.
At the end of 2016, as a result of the continued
strength of the dollar versus the euro, we recorded a non-cash
reduction in the carrying value of our net assets, consisting
primarily of our fixed assets, denominated in euros. This non-cash
reduction of approximately $14.4 million does not affect our net
income, Operating EBITDA or cash flows but is reflected in our
other comprehensive income (loss) and as a reduction to our total
equity.
Earnings Release CallIn
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
Friday, February 10, 2017 at 10:00 AM (Eastern Standard Time).
Listeners can access the conference call live and archived for
thirty days over the Internet at
http://edge.media-server.com/m/p/swgdj83a or through a link on
the company's home page at http://www.mercerint.com. Please allow
15 minutes prior to the call to visit the site and download and
install any necessary audio software.
Mercer International Inc. is a global pulp
manufacturing company. To obtain further information on the
company, please visit its web site at
http://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", "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.
-FINANCIAL TABLES FOLLOW-
|
MERCER INTERNATIONAL INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Unaudited) |
(In thousands, except per share
data) |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues |
|
|
|
|
|
|
|
Pulp |
$ |
202,809 |
|
|
$ |
216,313 |
|
|
$ |
847,328 |
|
|
$ |
946,237 |
|
Energy
and chemicals |
18,885 |
|
|
21,515 |
|
|
84,295 |
|
|
86,967 |
|
|
221,694 |
|
|
237,828 |
|
|
931,623 |
|
|
1,033,204 |
|
Costs and expenses |
|
|
|
|
|
|
|
Operating
costs, excluding depreciation and amortization |
151,582 |
|
|
165,776 |
|
|
701,875 |
|
|
753,523 |
|
Operating
depreciation and amortization |
18,666 |
|
|
17,174 |
|
|
71,476 |
|
|
67,761 |
|
Selling,
general and administrative expenses |
12,401 |
|
|
10,706 |
|
|
44,529 |
|
|
46,236 |
|
Operating income |
39,045 |
|
|
44,172 |
|
|
113,743 |
|
|
165,684 |
|
|
|
|
|
|
|
|
|
Other income
(expenses) |
|
|
|
|
|
|
|
Interest
expense |
(12,857 |
) |
|
(13,256 |
) |
|
(51,575 |
) |
|
(53,891 |
) |
Foreign
exchange loss on intercompany debt |
(1,444 |
) |
|
(874 |
) |
|
(1,140 |
) |
|
(5,306 |
) |
Gain
(loss) on derivative instruments |
11 |
|
|
(236 |
) |
|
(241 |
) |
|
(935 |
) |
Other
income (expenses) |
(926 |
) |
|
(432 |
) |
|
(1,323 |
) |
|
(601 |
) |
Total other
expenses |
(15,216 |
) |
|
(14,798 |
) |
|
(54,279 |
) |
|
(60,733 |
) |
Income before provision
for income taxes |
23,829 |
|
|
29,374 |
|
|
59,464 |
|
|
104,951 |
|
|
|
|
|
|
|
|
|
Current
income tax provision |
(821 |
) |
|
(2,644 |
) |
|
(7,712 |
) |
|
(11,934 |
) |
Deferred
income tax provision |
(4,519 |
) |
|
(5,034 |
) |
|
(16,809 |
) |
|
(17,515 |
) |
Net income |
$ |
18,489 |
|
|
$ |
21,696 |
|
|
$ |
34,943 |
|
|
$ |
75,502 |
|
|
|
|
|
|
|
|
|
Net income per common
share |
|
|
|
|
|
|
|
Basic |
$ |
0.29 |
|
|
$ |
0.34 |
|
|
$ |
0.54 |
|
|
$ |
1.17 |
|
Diluted |
$ |
0.28 |
|
|
$ |
0.33 |
|
|
$ |
0.54 |
|
|
$ |
1.17 |
|
|
|
|
|
|
|
|
|
Dividends declared per
common share |
$ |
0.115 |
|
|
$ |
0.115 |
|
|
$ |
0.460 |
|
|
$ |
0.230 |
|
MERCER INTERNATIONAL INC. |
CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
(In thousands, except share and per share
data) |
|
|
December 31, |
|
2016 |
|
2015 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and
cash equivalents |
$ |
136,569 |
|
|
$ |
99,629 |
|
Restricted cash |
4,327 |
|
|
9,230 |
|
Accounts
receivable |
123,892 |
|
|
134,254 |
|
Inventories |
133,451 |
|
|
141,001 |
|
Prepaid
expenses and other |
3,612 |
|
|
4,697 |
|
Total current
assets |
401,851 |
|
|
388,811 |
|
|
|
|
|
Property,
plant and equipment, net |
738,276 |
|
|
762,391 |
|
Intangible and other assets |
7,591 |
|
|
8,461 |
|
Deferred
income tax |
10,990 |
|
|
23,154 |
|
Total assets |
$ |
1,158,708 |
|
|
$ |
1,182,817 |
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current
liabilities |
|
|
|
Accounts
payable and other |
$ |
92,133 |
|
|
$ |
103,450 |
|
Pension
and other post-retirement benefit obligations |
1,037 |
|
|
971 |
|
Total current
liabilities |
93,170 |
|
|
104,421 |
|
|
|
|
|
Debt |
617,545 |
|
|
638,043 |
|
Interest
rate derivative liability |
— |
|
|
6,533 |
|
Pension
and other post-retirement benefit obligations |
25,084 |
|
|
25,374 |
|
Capital
leases and other |
26,467 |
|
|
12,299 |
|
Deferred
income tax |
17,314 |
|
|
13,171 |
|
Total liabilities |
779,580 |
|
|
799,841 |
|
|
|
|
|
Shareholders’
equity |
|
|
|
Common
shares $1 par value; 200,000,000 authorized; 64,694,000 issued and
outstanding (2015 – 64,502,000) |
64,656 |
|
|
64,424 |
|
Additional paid-in capital |
333,673 |
|
|
329,246 |
|
Retained
earnings |
166,068 |
|
|
160,880 |
|
Accumulated other comprehensive loss |
(185,269 |
) |
|
(171,574 |
) |
Total shareholders’
equity |
379,128 |
|
|
382,976 |
|
Total liabilities and
shareholders’ equity |
$ |
1,158,708 |
|
|
$ |
1,182,817 |
|
MERCER INTERNATIONAL INC. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(Unaudited) |
(In thousands) |
|
|
For the Year Ended December 31, |
|
2016 |
|
2015 |
|
2014 |
Cash flows from (used
in) operating activities |
|
|
|
|
|
Net
income |
$ |
34,943 |
|
|
$ |
75,502 |
|
|
$ |
120,966 |
|
Adjustments to reconcile net income to cash flows from
operating activities |
Unrealized (gain) loss on derivative instruments |
181 |
|
|
573 |
|
|
(11,501 |
) |
Depreciation and amortization |
71,984 |
|
|
68,333 |
|
|
78,012 |
|
Deferred
income tax (benefit) provision |
16,809 |
|
|
17,515 |
|
|
(22,016 |
) |
Foreign
exchange loss on intercompany debt |
1,140 |
|
|
5,306 |
|
|
4,777 |
|
Defined
benefit pension plan and other post-retirement benefit plan
expense |
1,955 |
|
|
2,162 |
|
|
2,475 |
|
Stock
compensation expense |
4,659 |
|
|
2,409 |
|
|
1,586 |
|
Other |
3,715 |
|
|
2,756 |
|
|
(1,281 |
) |
Defined
benefit pension plan and other post-retirement benefit plan
contributions |
(2,316 |
) |
|
(2,349 |
) |
|
(2,951 |
) |
Changes
in working capital |
|
|
|
|
|
Accounts
receivable |
9,466 |
|
|
(11,256 |
) |
|
(25,113 |
) |
Inventories |
6,844 |
|
|
(13,235 |
) |
|
6,445 |
|
Accounts
payable and accrued expenses |
(10,274 |
) |
|
9,665 |
|
|
(5,382 |
) |
Other |
1,676 |
|
|
1,839 |
|
|
(1,429 |
) |
Net cash
from (used in) operating activities |
140,782 |
|
|
159,220 |
|
|
144,588 |
|
|
|
|
|
|
|
Cash flows from (used
in) investing activities |
|
|
|
|
|
Purchase
of property, plant and equipment |
(42,526 |
) |
|
(46,536 |
) |
|
(34,612 |
) |
Purchase
of intangible assets |
(1,844 |
) |
|
(3,809 |
) |
|
(4,776 |
) |
Other |
67 |
|
|
528 |
|
|
910 |
|
Net cash
from (used in) investing activities |
(44,303 |
) |
|
(49,817 |
) |
|
(38,478 |
) |
|
|
|
|
|
|
Cash flows from (used
in) financing activities |
|
|
|
|
|
Repurchase of notes and repayment of debt |
(23,079 |
) |
|
(10,763 |
) |
|
(891,019 |
) |
Proceeds
from issuance of notes |
— |
|
|
— |
|
|
650,000 |
|
Proceeds
from issuance of shares |
— |
|
|
— |
|
|
53,859 |
|
Dividend
payments |
(29,733 |
) |
|
(7,418 |
) |
|
— |
|
Proceeds
from (repayment of) revolving credit facilities, net |
— |
|
|
(23,058 |
) |
|
26,254 |
|
Payment
of interest rate derivative liability |
(10,883 |
) |
|
(13,530 |
) |
|
— |
|
Payment
of debt issuance costs |
— |
|
|
(326 |
) |
|
(20,169 |
) |
Proceeds
from government grants |
2,988 |
|
|
158 |
|
|
6,699 |
|
Other |
(1,670 |
) |
|
(1,727 |
) |
|
(1,376 |
) |
Net cash
from (used in) financing activities |
(62,377 |
) |
|
(56,664 |
) |
|
(175,752 |
) |
|
|
|
|
|
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
(2,065 |
) |
|
(7,338 |
) |
|
(14,628 |
) |
|
|
|
|
|
|
Net increase (decrease)
in cash, cash equivalents and restricted cash |
32,037 |
|
|
45,401 |
|
|
(84,270 |
) |
Cash, cash equivalents
and restricted cash, beginning of year |
108,859 |
|
|
63,458 |
|
|
147,728 |
|
Cash, cash equivalents
and restricted cash, end of year |
$ |
140,896 |
|
|
$ |
108,859 |
|
|
$ |
63,458 |
|
MERCER INTERNATIONAL INC.
COMPUTATION OF OPERATING
EBITDA(Unaudited)(In
thousands)
Operating EBITDA is defined as operating income
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 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, we believe 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 income, 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 income or income from
operations as a measure of performance, nor as an alternative to
net cash from operating activities as a measure of
liquidity. The following tables set forth the net income to
Operating EBITDA:
|
Three Months EndedDecember
31, |
|
Year Ended December
31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Net income |
$ |
18,489 |
|
$ |
21,696 |
|
$ |
34,943 |
|
$ |
75,502 |
Income tax
provision |
|
5,340 |
|
|
7,678 |
|
|
24,521 |
|
|
29,449 |
Interest expense |
|
12,857 |
|
|
13,256 |
|
|
51,575 |
|
|
53,891 |
Foreign exchange loss
on intercompany debt |
|
1,444 |
|
|
874 |
|
|
1,140 |
|
|
5,306 |
(Gain) loss on
derivative instruments |
|
(11 |
) |
|
236 |
|
|
241 |
|
|
935 |
Other expenses |
|
926 |
|
|
432 |
|
|
1,323 |
|
|
601 |
Operating income |
|
39,045 |
|
|
44,172 |
|
|
113,743 |
|
|
165,684 |
Add: Depreciation and
amortization |
|
18,772 |
|
|
17,377 |
|
|
71,984 |
|
|
68,333 |
Operating EBITDA |
$ |
57,817 |
|
$ |
61,549 |
|
$ |
185,727 |
|
$ |
234,017 |
APPROVED BY:
Jimmy S.H. Lee
Executive Chairman
(604) 684-1099
David M. Gandossi
Chief Executive Officer
(604) 684-1099
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