Mercer International Inc. (Nasdaq: MERC) today reported that
Operating EBITDA in the fourth quarter of 2023 was $21.1 million
compared to $96.1 million in the same quarter of 2022 and $37.5
million in the third quarter of 2023.
In the fourth quarter of 2023, net loss was
$87.2 million (or $1.31 per share), which included a non-cash
impairment of $33.7 million (or $0.51 per share) relating to the
classification of our sandalwood business as held for sale,
compared to net income of $20.0 million (or $0.30 per share) in the
fourth quarter of 2022 and net loss of $26.0 million (or $0.39 per
share) in the third quarter of 2023.
In 2023, Operating EBITDA was $17.5 million
compared to $536.5 million in 2022. Net loss was $242.1 million (or
$3.65 per share) in 2023 compared to net income of $247.0 million
(or $3.74 per basic share and $3.71 per diluted share) in 2022.
Mr. Juan Carlos Bueno, the Chief Executive
Officer, stated: “In the fourth quarter, our operating results were
positively impacted by an improved pulp pricing environment.
However, our results decreased relative to the preceding quarter
because of greater planned maintenance downtime in the fourth
quarter and because in the third quarter there were positive
impacts from the recognition of non-cash items and sales of
previously impaired inventory.
In the fourth quarter, we saw improved pulp
pricing for both NBSK and NBHK across all our markets as customers
restocked inventories. We currently believe this pricing momentum
will continue into 2024 with modest price increases expected in the
first quarter. We continued to be negatively impacted by the
overall weakness in the lumber market as slightly higher prices in
the U.S. were offset by lower prices in Europe.
We recognized a non‐cash impairment of $33.7
million against our sandalwood business in the fourth quarter of
2023 as we made the strategic decision to pursue a sale of this
business to focus on our core strategy, resulting in these assets
and associated liabilities being valued at fair market value and
classified as held for sale as at the end of 2023.
In the fourth quarter of 2023, all our mills ran
very efficiently and we had 23 days of scheduled maintenance
downtime (approximately 31,600 ADMTs) at our pulp mills. In the
first quarter of 2024, we have no scheduled maintenance downtime at
our pulp mills.
Overall per unit fiber costs for our pulp
segment were stable in the fourth quarter compared to the third
quarter. Per unit fiber costs for our solid wood segment decreased
due to the availability of lower cost beetle damaged wood in
Germany.
In 2023, we saw strong growth in our mass timber
business as we secured major customer contracts and continued to
build out our order book. We began 2024 with a mass timber order
book of almost $100 million. We are pleased that this business has
exceeded our expectations to date, including by contributing
positively to our Operating EBITDA in the fourth quarter.”
Mr. Bueno concluded: “We have seen pulp pricing
and fiber supply conditions improve and currently expect this to
continue in 2024. While market conditions have improved, our team
remains disciplined on controlling costs, including by limiting
discretionary spending and managing working capital to ensure our
cash and liquidity levels remain healthy. We finished 2023 with
approximately $610 million in aggregate liquidity and believe we
are well positioned to ensure the integrity of our balance sheet
through the business cycle.”
Current Market Environment
We currently expect improved pulp pricing in
2024, led by Europe, where third-party quoted list prices for NBSK
pulp increased to $1,350 per ADMT in January 2024 with additional
modest increases expected to continue in the first half of 2024 as
a result of stronger demand due to the easing of inflationary
pressures. For China and North America we currently expect prices
to be generally stable in the first part of 2024, with reduced
supply offset by continued weak demand. For NBHK pulp we currently
expect stable prices in the first half of 2024.
In our solid wood segment, we currently expect a
modest increase in U.S. lumber prices in the first half of 2024
driven by increased housing activity and low customer inventory
levels. In Europe, we expect lumber prices to be relatively flat as
demand remains weak due to continued high interest rates and
economic uncertainty. We currently expect mass timber prices to be
stable in the first half of 2024.
Consolidated Financial
Results
| |
Q4 |
|
|
Q3 |
|
|
Q4 |
|
|
YTD |
|
|
YTD |
|
| |
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022(1) |
|
| |
(in
thousands, except per share amounts) |
|
| Revenues |
$ |
470,494 |
|
|
$ |
470,821 |
|
|
$ |
583,056 |
|
|
$ |
1,993,844 |
|
|
$ |
2,280,937 |
|
| Operating income (loss) |
$ |
(56,395 |
) |
|
$ |
(3,426 |
) |
|
$ |
47,263 |
|
|
$ |
(188,774 |
) |
|
$ |
392,368 |
|
| Operating EBITDA |
$ |
21,145 |
|
|
$ |
37,527 |
|
|
$ |
96,128 |
|
|
$ |
17,462 |
|
|
$ |
536,521 |
|
| Net income (loss) |
$ |
(87,216 |
) |
|
$ |
(25,956 |
) |
|
$ |
20,024 |
|
|
$ |
(242,056 |
) |
|
$ |
247,039 |
|
| Net income (loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(1.31 |
) |
|
$ |
(0.39 |
) |
|
$ |
0.30 |
|
|
$ |
(3.65 |
) |
|
$ |
3.74 |
|
|
Diluted |
$ |
(1.31 |
) |
|
$ |
(0.39 |
) |
|
$ |
0.30 |
|
|
$ |
(3.65 |
) |
|
$ |
3.71 |
|
| ______________ |
| (1) Includes results of the Torgau facility
since September 30, 2022. |
| |
Consolidated – Three Months Ended December 31, 2023
Compared to Three Months Ended December 31, 2022
Total revenues in the fourth quarter of 2023
decreased by approximately 19% to $470.5 million from $583.1
million in the same quarter of 2022 primarily due to lower pulp and
energy sales realizations partially offset by higher pulp sales
volumes.
Costs and expenses in the fourth quarter of 2023
decreased modestly to $526.9 million from $535.8 million in the
same quarter of 2022 primarily as a result of lower per unit fiber,
energy, freight and chemical costs partially offset by a $33.7
million non-cash impairment recognized in connection with the
classification of our sandalwood business as held for sale and
higher pulp sales volumes.
In the fourth quarter of 2023, Operating EBITDA
was $21.1 million compared to $96.1 million in the same quarter of
2022 primarily due to lower pulp and energy sales realizations
partially offset by lower per unit production and freight
costs.
Segment ResultsPulp
| |
Three Months Ended December 31, |
|
| |
2023 |
|
|
2022 |
|
| |
(in
thousands) |
|
|
Pulp revenues |
$ |
340,687 |
|
|
$ |
425,421 |
|
| Energy and chemical revenues |
$ |
23,495 |
|
|
$ |
37,804 |
|
| Operating income |
$ |
1,245 |
|
|
$ |
68,972 |
|
In the fourth quarter of 2023, pulp segment
operating income was $1.2 million compared to $69.0 million in the
same quarter of 2022 primarily as a result of lower pulp and energy
sales realizations partially offset by lower per unit fiber,
energy, chemical and freight costs.
Our pulp segment revenues decreased by
approximately 21% to $364.2 million in the fourth quarter of 2023
from $463.2 million in the same quarter of 2022 primarily due to
the relatively weaker pulp market and lower energy revenues.
Pulp revenues in the fourth quarter of 2023
decreased by approximately 20% to $340.7 million from $425.4
million in the same quarter of 2022 due to lower sales realizations
partially offset by higher sales volumes.
In the fourth quarter of 2023, third party
industry quoted average list prices for NBSK pulp were materially
lower in all our markets compared to the same quarter of 2022. Our
average NBSK pulp sales realizations decreased by approximately 22%
to $709 per ADMT in the fourth quarter of 2023 from $913 per ADMT
in the same quarter of 2022. In the fourth quarter of 2023, our
average NBHK pulp sales realizations decreased by approximately 34%
to $593 per ADMT from $896 per ADMT in the same quarter of
2022.
Total pulp sales volumes increased by
approximately 6% to 491,156 ADMTs in the fourth quarter of 2023
from 465,318 ADMTs in the same quarter of 2022 primarily because of
higher production.
Energy and chemical revenues decreased by
approximately 38% to $23.5 million in the fourth quarter of 2023
from $37.8 million in the same quarter of 2022 as a result of lower
sales realizations partially offset by higher sales volumes.
Costs and expenses in the fourth quarter of 2023
decreased by approximately 8% to $363.2 million from $394.3 million
in the same quarter of 2022 primarily due to lower per unit fiber,
energy, chemical and freight costs partially offset by higher pulp
sales volumes.
In the fourth quarter of 2023, per unit fiber
costs decreased by approximately 7% from the same quarter of 2022
driven by stable supply and the benefits from our Peace River
woodroom. We currently expect modestly lower per unit fiber costs
in the first quarter of 2024 due to stable supply.
Solid Wood
| |
Three Months Ended December 31, |
|
| |
2023 |
|
|
2022 |
|
| |
(in
thousands) |
|
|
Lumber revenues |
$ |
47,821 |
|
|
$ |
45,041 |
|
| Energy revenues |
$ |
4,928 |
|
|
$ |
7,310 |
|
| Manufactured products
revenues(1) |
$ |
16,252 |
|
|
$ |
5,583 |
|
| Pallet revenues |
$ |
23,767 |
|
|
$ |
36,063 |
|
| Biofuels revenues(2) |
$ |
10,916 |
|
|
$ |
17,691 |
|
| Wood residuals revenues |
$ |
1,759 |
|
|
$ |
6,722 |
|
| Operating loss |
$ |
(18,411 |
) |
|
$ |
(14,281 |
) |
|
______________ |
| (1) Manufactured
products primarily includes cross-laminated timber, glulam and
finger joint lumber. |
| (2) Biofuels
includes pellets and briquettes. |
| |
In the fourth quarter of 2023, solid wood
segment operating loss was $18.4 million compared to $14.3 million
in the same quarter of 2022 primarily due to lower solid wood
products' sales realizations, with the exception of manufactured
products, partially offset by lower per unit fiber costs.
In the fourth quarter of 2023, solid wood
segment revenues decreased by approximately 11% to $105.4 million
from $118.4 million in the same quarter of 2022 primarily as a
result of lower pallet, biofuels, energy and wood residuals sales
realizations partially offset by higher manufactured products
revenues.
In the fourth quarter of 2023, lumber revenues
increased by approximately 6% to $47.8 million from $45.0 million
in the same quarter of 2022 as higher sales volumes were only
partially offset by modestly lower sales realizations. Average
lumber sales realizations decreased by approximately 6% to $427 per
Mfbm in the fourth quarter of 2023 from approximately $454 per Mfbm
in the same quarter of 2022 as a result of weaker demand in the
European market driven by higher interest rates and an uncertain
economic outlook. In the U.S. market, sales realizations were flat
in the fourth quarter of 2023 compared to the same quarter of 2022.
The U.S. market accounted for approximately 49% of our lumber
revenues and approximately 39% of our lumber sales volumes in the
fourth quarter of 2023. The remaining balance of our lumber sales
were primarily to Europe.
Lumber sales volumes increased by approximately
13% to 112.0 MMfbm in the fourth quarter of 2023 from 99.2 MMfbm in
the same quarter of 2022 primarily due to the timing of sales.
In the fourth quarter of 2023, we continued to
ramp up our mass timber operations and manufactured products
revenues increased to $16.3 million from $5.6 million in the same
quarter of 2022 as a result of both higher sales realizations and
sales volumes. Manufactured products sales realizations increased
to $1,234 per m3 in the fourth quarter of 2023 from $561 per m3 in
the same quarter of 2022 as a result of higher cross-laminated
timber and glulam sales volumes.
Energy and wood residuals revenues in the fourth
quarter of 2023 decreased by approximately 52% to $6.7 million from
$14.0 million in the same quarter of 2022 primarily due to lower
sales realizations.
Pallet revenues in the fourth quarter of 2023
decreased by approximately 34% to $23.8 million from $36.1 million
in the same quarter of 2022 primarily due to lower sales
realizations and sales volumes. Biofuels in the fourth quarter of
2023 decreased by approximately 38% to $10.9 million from $17.7
million in the same quarter of 2022 primarily due to lower sales
volumes and realizations.
In the fourth quarter of 2023, lumber production
decreased by approximately 5% to 111.6 MMfbm from 117.3 MMfbm in
the same quarter of 2022 as a result of maintenance downtime.
Fiber costs were approximately 70% of our lumber
cash production costs in the fourth quarter of 2023. In the fourth
quarter of 2023, per unit fiber costs for lumber production
decreased by approximately 19% compared to the same quarter of 2022
due to an increased supply of beetle damaged wood in Germany. We
currently expect modestly lower per unit fiber costs in the first
quarter of 2024 as a result of the continuing availability of
beetle damaged wood partially offset by stronger demand.
Consolidated – Year Ended
December 31, 2023 Compared to Year Ended December 31,
2022
Total revenues in 2023 decreased by
approximately 13% to $1,993.8 million from $2,280.9 million in 2022
primarily due to lower pulp, lumber and energy sales realizations
partially offset by the inclusion of Torgau for a full year and
higher sales volumes.
Costs and expenses in 2023 increased by
approximately 16% to $2,182.6 million from $1,888.6 million in 2022
primarily as a result of the inclusion of Torgau for a full year,
higher per unit fiber costs, a $33.7 million impairment recognized
in connection with the classification of our sandalwood business as
held for sale and higher sales volumes. These increases were
partially offset by lower per unit energy and freight costs and the
receipt of $46.4 million of insurance proceeds in 2023 relating to
the 2021 turbine downtime at the Rosenthal mill and the July 2022
fire at the Stendal mill. In 2022, we received insurance proceeds
of $17.3 million related to the Stendal fire.
In 2023, Operating EBITDA was $17.5 million
compared to $536.5 million in 2022 primarily due to lower pulp,
lumber and energy sales realizations and higher per unit fiber
costs partially offset by lower per unit energy and freight costs
and higher insurance proceeds received.
Liquidity
As of December 31, 2023, we had cash and
cash equivalents of $314.0 million and approximately $296.3 million
available under our revolving credit facilities and as a result
aggregate liquidity of about $610 million.
The following table is a summary of selected
financial information as of the dates indicated:
| |
As of December 31, |
|
| |
2023 |
|
|
2022 |
|
| |
(in
thousands) |
|
|
Cash and cash equivalents |
$ |
313,992 |
|
|
$ |
354,032 |
|
| Working capital |
$ |
806,468 |
|
|
$ |
800,114 |
|
| Total assets |
$ |
2,662,578 |
|
|
$ |
2,725,037 |
|
| Long-term liabilities |
$ |
1,740,731 |
|
|
$ |
1,508,192 |
|
| Total shareholders' equity |
$ |
635,410 |
|
|
$ |
838,784 |
|
Quarterly Dividend
A quarterly dividend of $0.075 per share will be
paid on April 4, 2024 to all shareholders of record on March 27,
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 February 16, 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/6gsbsf2n 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 2.3 million tonnes of
pulp, 960 million board feet of lumber, 210 thousand cubic meters
of cross-laminated timber, 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:Jimmy S.H. LeeExecutive Chairman(604) 684-1099
Juan Carlos BuenoChief Executive Officer(604) 684-1099
-FINANCIAL TABLES FOLLOW-
Summary Financial Highlights
| |
Q4 |
|
|
Q3 |
|
|
Q4 |
|
|
YTD |
|
|
YTD |
|
| |
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022(1) |
|
| |
(in
thousands, except per share amounts) |
|
|
Pulp segment revenues |
$ |
364,182 |
|
|
$ |
348,853 |
|
|
$ |
463,225 |
|
|
$ |
1,516,130 |
|
|
$ |
1,866,117 |
|
|
Solid wood segment revenues |
|
105,443 |
|
|
|
119,547 |
|
|
|
118,410 |
|
|
|
472,054 |
|
|
|
408,458 |
|
|
Corporate and other revenues |
|
869 |
|
|
|
2,421 |
|
|
|
1,421 |
|
|
|
5,660 |
|
|
|
6,362 |
|
| Total revenues |
$ |
470,494 |
|
|
$ |
470,821 |
|
|
$ |
583,056 |
|
|
$ |
1,993,844 |
|
|
$ |
2,280,937 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment operating income (loss) |
$ |
1,245 |
|
|
$ |
21,181 |
|
|
$ |
68,972 |
|
|
$ |
(48,262 |
) |
|
$ |
340,664 |
|
|
Solid wood segment operating income (loss) |
|
(18,411 |
) |
|
|
(19,690 |
) |
|
|
(14,281 |
) |
|
|
(87,663 |
) |
|
|
70,642 |
|
|
Corporate and other operating loss |
|
(39,229 |
) |
|
|
(4,917 |
) |
|
|
(7,428 |
) |
|
|
(52,849 |
) |
|
|
(18,938 |
) |
| Total operating income (loss) |
$ |
(56,395 |
) |
|
$ |
(3,426 |
) |
|
$ |
47,263 |
|
|
$ |
(188,774 |
) |
|
$ |
392,368 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment depreciation and amortization |
$ |
30,783 |
|
|
$ |
28,186 |
|
|
$ |
29,199 |
|
|
$ |
114,151 |
|
|
$ |
112,058 |
|
|
Solid wood segment depreciation and amortization |
|
12,779 |
|
|
|
12,517 |
|
|
|
19,451 |
|
|
|
57,320 |
|
|
|
31,170 |
|
|
Corporate and other depreciation and amortization |
|
244 |
|
|
|
250 |
|
|
|
215 |
|
|
|
1,031 |
|
|
|
925 |
|
| Total depreciation and amortization |
$ |
43,806 |
|
|
$ |
40,953 |
|
|
$ |
48,865 |
|
|
$ |
172,502 |
|
|
$ |
144,153 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating EBITDA |
$ |
21,145 |
|
|
$ |
37,527 |
|
|
$ |
96,128 |
|
|
$ |
17,462 |
|
|
$ |
536,521 |
|
| Impairment of sandalwood business held for sale |
$ |
33,734 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
33,734 |
|
|
$ |
— |
|
| Income tax recovery (provision) |
$ |
(1,084 |
) |
|
$ |
(3,984 |
) |
|
$ |
(8,608 |
) |
|
$ |
27,767 |
|
|
$ |
(98,264 |
) |
| Net income (loss) |
$ |
(87,216 |
) |
|
$ |
(25,956 |
) |
|
$ |
20,024 |
|
|
$ |
(242,056 |
) |
|
$ |
247,039 |
|
| Net income (loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(1.31 |
) |
|
$ |
(0.39 |
) |
|
$ |
0.30 |
|
|
$ |
(3.65 |
) |
|
$ |
3.74 |
|
|
Diluted |
$ |
(1.31 |
) |
|
$ |
(0.39 |
) |
|
$ |
0.30 |
|
|
$ |
(3.65 |
) |
|
$ |
3.71 |
|
| Common shares outstanding at period end |
|
66,525 |
|
|
|
66,525 |
|
|
|
66,167 |
|
|
|
66,525 |
|
|
|
66,167 |
|
| ______________ |
| (1) Includes results of the Torgau facility
since September 30, 2022. |
| |
Summary Operating Highlights
|
|
Q4 |
|
Q3 |
|
Q4 |
|
YTD |
|
YTD |
|
| |
2023 |
|
2023 |
|
2022 |
|
2023 |
|
2022(1) |
|
| Pulp Segment |
|
|
|
|
|
|
|
|
|
|
| Pulp production ('000 ADMTs) |
|
|
|
|
|
|
|
|
|
|
|
NBSK |
436.2 |
|
397.5 |
|
390.9 |
|
1,714.4 |
|
1,607.6 |
|
|
NBHK |
71.5 |
|
82.5 |
|
80.6 |
|
251.2 |
|
271.0 |
|
| Annual maintenance downtime
('000 ADMTs) |
31.6 |
|
13.3 |
|
39.5 |
|
82.9 |
|
111.0 |
|
| Annual maintenance downtime
(days) |
23 |
|
13 |
|
21 |
|
71 |
|
80 |
|
| Pulp sales ('000 ADMTs) |
|
|
|
|
|
|
|
|
|
|
|
NBSK |
411.8 |
|
425.1 |
|
393.4 |
|
1,689.0 |
|
1,660.8 |
|
|
NBHK |
79.4 |
|
62.1 |
|
72.0 |
|
262.2 |
|
257.0 |
|
| Average NBSK pulp prices
($/ADMT)(2) |
|
|
|
|
|
|
|
|
|
|
|
Europe |
1,245 |
|
1,160 |
|
1,442 |
|
1,257 |
|
1,427 |
|
|
China |
748 |
|
680 |
|
920 |
|
747 |
|
949 |
|
|
North America |
1,312 |
|
1,293 |
|
1,745 |
|
1,448 |
|
1,704 |
|
| Average NBHK pulp prices
($/ADMT)(2) |
|
|
|
|
|
|
|
|
|
|
|
China |
643 |
|
530 |
|
837 |
|
592 |
|
794 |
|
|
North America |
1,083 |
|
1,023 |
|
1,608 |
|
1,227 |
|
1,514 |
|
| Average pulp sales realizations
($/ADMT)(3) |
|
|
|
|
|
|
|
|
|
|
|
NBSK |
709 |
|
666 |
|
913 |
|
729 |
|
876 |
|
|
NBHK |
593 |
|
530 |
|
896 |
|
627 |
|
869 |
|
| Energy production ('000
MWh)(4) |
544.6 |
|
524.4 |
|
515.8 |
|
2,142.0 |
|
2,028.1 |
|
| Energy sales ('000 MWh)(4) |
213.2 |
|
214.8 |
|
183.4 |
|
832.6 |
|
751.7 |
|
| Average energy sales realizations
($/MWh)(4) |
92 |
|
108 |
|
156 |
(5) |
107 |
|
214 |
(5) |
| Solid Wood
Segment |
|
|
|
|
|
|
|
|
|
|
| Lumber |
|
|
|
|
|
|
|
|
|
|
|
Production (MMfbm) |
111.6 |
|
94.4 |
|
117.3 |
|
462.3 |
|
442.2 |
|
|
Sales (MMfbm) |
112.0 |
|
114.7 |
|
99.2 |
|
500.5 |
|
409.9 |
|
|
Average sales realizations ($/Mfbm) |
427 |
|
443 |
|
454 |
|
435 |
|
703 |
|
| Energy |
|
|
|
|
|
|
|
|
|
|
|
Production and sales ('000 MWh) |
38.7 |
|
39.0 |
|
39.0 |
|
160.2 |
|
109.6 |
|
|
Average sales realizations ($/MWh) |
127 |
|
140 |
|
159 |
(5) |
134 |
|
224 |
(5) |
| Manufactured products(6) |
|
|
|
|
|
|
|
|
|
|
|
Production ('000 cubic meters) |
10.2 |
|
10.9 |
|
8.3 |
|
25.1 |
|
36.3 |
|
|
Sales ('000 cubic meters) |
12.1 |
|
11.0 |
|
6.1 |
|
33.4 |
|
28.8 |
|
|
Average sales realizations ($/cubic meters) |
1,234 |
|
1,752 |
|
561 |
|
1,514 |
|
715 |
|
| Pallets |
|
|
|
|
|
|
|
|
|
|
|
Production ('000 units) |
2,184.7 |
|
2,895.1 |
|
2,568.4 |
|
10,707.2 |
|
2,568.4 |
|
|
Sales ('000 units) |
2,450.7 |
|
2,765.3 |
|
2,646.3 |
|
11,041.2 |
|
2,646.3 |
|
|
Average sales realizations ($/unit) |
10 |
|
10 |
|
14 |
|
11 |
|
14 |
|
| Biofuels(7) |
|
|
|
|
|
|
|
|
|
|
|
Production ('000 tonnes) |
38.9 |
|
52.1 |
|
45.7 |
|
167.2 |
|
45.7 |
|
|
Sales ('000 tonnes) |
39.9 |
|
38.7 |
|
49.8 |
|
144.8 |
|
49.8 |
|
|
Average sales realizations ($/tonne) |
274 |
|
294 |
|
355 |
|
281 |
|
355 |
|
| Average Spot Currency
Exchange Rates |
|
|
|
|
|
|
|
|
|
|
| $ / €(8) |
1.0761 |
|
1.0884 |
|
1.0218 |
|
1.0817 |
|
1.0534 |
|
| $ / C$(8) |
0.7347 |
|
0.7458 |
|
0.7366 |
|
0.7412 |
|
0.7691 |
|
|
______________ |
| (1) Includes
results of the Torgau facility since September 30, 2022. |
| (2) Source:
RISI pricing report. Europe and North America are list prices.
China are net prices which include discounts, allowances and
rebates. |
| (3) Sales
realizations after customer discounts, rebates and other selling
concessions. Incorporates the effect of pulp price variations
occurring between the order and shipment dates. |
| (4) Does not
include our 50% joint venture interest in the Cariboo mill, which
is accounted for using the equity method. |
| (5) Energy
sales realizations for the year ended December 31, 2022 are net of
the German energy windfall tax of $6.7 million for the pulp segment
and $1.1 million for the solid wood segment. |
|
(6) Manufactured products includes cross-laminated timber,
glulam and finger joint lumber. |
| (7) Biofuels
includes pellets and briquettes. |
| (8) Average
Federal Reserve Bank of New York Noon Buying Rates over the
reporting period. |
|
MERCER INTERNATIONAL INC.CONSOLIDATED
STATEMENTS OF
OPERATIONS(Unaudited)(In
thousands, except per share data) |
| |
|
|
|
|
|
| |
Three Months Ended December 31, |
|
|
For the Year Ended December 31, |
|
| |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Revenues |
$ |
470,494 |
|
|
$ |
583,056 |
|
|
$ |
1,993,844 |
|
|
$ |
2,280,937 |
|
| Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales, excluding depreciation and amortization |
|
422,677 |
|
|
|
451,196 |
|
|
|
1,853,482 |
|
|
|
1,638,672 |
|
|
Cost of sales depreciation and amortization |
|
43,738 |
|
|
|
48,841 |
|
|
|
172,223 |
|
|
|
144,064 |
|
|
Selling, general and administrative expenses |
|
26,740 |
|
|
|
35,756 |
|
|
|
123,179 |
|
|
|
105,833 |
|
|
Impairment of sandalwood business held for sale |
|
33,734 |
|
|
|
— |
|
|
|
33,734 |
|
|
|
— |
|
| Operating income (loss) |
|
(56,395 |
) |
|
|
47,263 |
|
|
|
(188,774 |
) |
|
|
392,368 |
|
| Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(27,245 |
) |
|
|
(18,768 |
) |
|
|
(88,246 |
) |
|
|
(71,499 |
) |
|
Other income (expenses) |
|
(2,492 |
) |
|
|
137 |
|
|
|
7,197 |
|
|
|
24,434 |
|
| Total other expenses, net |
|
(29,737 |
) |
|
|
(18,631 |
) |
|
|
(81,049 |
) |
|
|
(47,065 |
) |
| Income (loss) before income
taxes |
|
(86,132 |
) |
|
|
28,632 |
|
|
|
(269,823 |
) |
|
|
345,303 |
|
| Income tax recovery
(provision) |
|
(1,084 |
) |
|
|
(8,608 |
) |
|
|
27,767 |
|
|
|
(98,264 |
) |
| Net income (loss) |
$ |
(87,216 |
) |
|
$ |
20,024 |
|
|
$ |
(242,056 |
) |
|
$ |
247,039 |
|
| Net income (loss) per common
share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(1.31 |
) |
|
$ |
0.30 |
|
|
$ |
(3.65 |
) |
|
$ |
3.74 |
|
|
Diluted |
$ |
(1.31 |
) |
|
$ |
0.30 |
|
|
$ |
(3.65 |
) |
|
$ |
3.71 |
|
| Dividends declared per common
share |
$ |
0.075 |
|
|
$ |
0.075 |
|
|
$ |
0.300 |
|
|
$ |
0.300 |
|
|
MERCER INTERNATIONAL INC.CONSOLIDATED
BALANCE SHEETS(Unaudited)(In
thousands, except share and per share data) |
| |
|
|
| |
December 31, |
|
| |
2023 |
|
|
2022 |
|
| ASSETS |
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
313,992 |
|
|
$ |
354,032 |
|
|
Accounts receivable, net |
|
306,166 |
|
|
|
351,993 |
|
|
Inventories |
|
414,161 |
|
|
|
450,470 |
|
|
Prepaid expenses and other |
|
23,461 |
|
|
|
21,680 |
|
|
Assets classified as held for sale |
|
35,125 |
|
|
|
— |
|
| Total current assets |
|
1,092,905 |
|
|
|
1,178,175 |
|
|
Property, plant and equipment, net |
|
1,409,937 |
|
|
|
1,341,322 |
|
|
Investment in joint ventures |
|
41,665 |
|
|
|
45,635 |
|
|
Amortizable intangible assets, net |
|
52,641 |
|
|
|
61,497 |
|
|
Goodwill |
|
35,381 |
|
|
|
30,937 |
|
|
Operating lease right-of-use assets |
|
11,725 |
|
|
|
15,049 |
|
|
Pension asset |
|
5,588 |
|
|
|
4,397 |
|
|
Other long-term assets |
|
12,736 |
|
|
|
48,025 |
|
| Total assets |
$ |
2,662,578 |
|
|
$ |
2,725,037 |
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
Accounts payable and other |
$ |
278,986 |
|
|
$ |
377,306 |
|
|
Pension and other post-retirement benefit obligations |
|
826 |
|
|
|
755 |
|
|
Liabilities associated with assets held for sale |
|
6,625 |
|
|
|
— |
|
| Total current liabilities |
|
286,437 |
|
|
|
378,061 |
|
|
Long-term debt |
|
1,609,425 |
|
|
|
1,346,508 |
|
|
Pension and other post-retirement benefit obligations |
|
12,483 |
|
|
|
12,178 |
|
|
Operating lease liabilities |
|
7,755 |
|
|
|
9,475 |
|
|
Other long-term liabilities |
|
13,744 |
|
|
|
14,072 |
|
|
Deferred income tax |
|
97,324 |
|
|
|
125,959 |
|
| Total liabilities |
|
2,027,168 |
|
|
|
1,886,253 |
|
| Shareholders’ equity |
|
|
|
|
|
|
Common shares $1 par value; 200,000,000 authorized; 66,525,000
issued and outstanding (2022 – 66,167,000) |
|
66,471 |
|
|
|
66,132 |
|
|
Additional paid-in capital |
|
359,497 |
|
|
|
354,495 |
|
|
Retained earnings |
|
336,113 |
|
|
|
598,119 |
|
|
Accumulated other comprehensive loss |
|
(126,671 |
) |
|
|
(179,962 |
) |
| Total shareholders’
equity |
|
635,410 |
|
|
|
838,784 |
|
| Total liabilities and
shareholders’ equity |
$ |
2,662,578 |
|
|
$ |
2,725,037 |
|
|
MERCER INTERNATIONAL INC.CONSOLIDATED
STATEMENTS OF CASH
FLOWS(Unaudited)(In
thousands) |
| |
|
|
| |
For the Year Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
| Cash flows from (used in)
operating activities |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(242,056 |
) |
|
$ |
247,039 |
|
|
$ |
170,988 |
|
|
Adjustments to reconcile net income (loss) to cash flows from
operating activities |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
172,502 |
|
|
|
144,153 |
|
|
|
132,199 |
|
|
Deferred income tax provision (recovery) |
|
(36,392 |
) |
|
|
7,003 |
|
|
|
18,791 |
|
|
Inventory impairment |
|
58,600 |
|
|
|
— |
|
|
|
— |
|
|
Impairment of sandalwood business held for sale |
|
33,734 |
|
|
|
— |
|
|
|
— |
|
|
Loss on early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
30,368 |
|
|
Defined benefit pension plans and other post-retirement benefit
plan expense |
|
5,214 |
|
|
|
1,708 |
|
|
|
2,831 |
|
|
Stock compensation expense |
|
5,922 |
|
|
|
6,737 |
|
|
|
2,394 |
|
|
Foreign exchange transaction losses (gains) |
|
3,905 |
|
|
|
(16,802 |
) |
|
|
(16,597 |
) |
|
Other |
|
(5,092 |
) |
|
|
(1,241 |
) |
|
|
384 |
|
|
Defined benefit pension plans and other post-retirement benefit
plan contributions |
|
(1,152 |
) |
|
|
(2,942 |
) |
|
|
(4,258 |
) |
|
Changes in working capital |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
52,507 |
|
|
|
(20,476 |
) |
|
|
(121,579 |
) |
|
Inventories |
|
(15,836 |
) |
|
|
(63,184 |
) |
|
|
(96,442 |
) |
|
Accounts payable and accrued expenses |
|
(98,182 |
) |
|
|
66,796 |
|
|
|
75,589 |
|
|
Other |
|
(2,679 |
) |
|
|
(8,131 |
) |
|
|
(12,454 |
) |
|
Net cash from (used in) operating activities |
|
(69,005 |
) |
|
|
360,660 |
|
|
|
182,214 |
|
| Cash flows from (used in)
investing activities |
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
(136,324 |
) |
|
|
(178,742 |
) |
|
|
(159,440 |
) |
|
Acquisition, net of cash acquired |
|
(82,100 |
) |
|
|
(256,604 |
) |
|
|
(51,258 |
) |
|
Property insurance proceeds |
|
12,203 |
|
|
|
8,616 |
|
|
|
21,540 |
|
|
Proceeds from government grants |
|
5,569 |
|
|
|
1,067 |
|
|
|
9,333 |
|
|
Purchase of term deposit |
|
— |
|
|
|
(75,000 |
) |
|
|
— |
|
|
Proceeds from sale of term deposit |
|
— |
|
|
|
75,519 |
|
|
|
— |
|
|
Other |
|
785 |
|
|
|
534 |
|
|
|
2,031 |
|
|
Net cash from (used in) investing activities |
|
(199,867 |
) |
|
|
(424,610 |
) |
|
|
(177,794 |
) |
| Cash flows from (used in)
financing activities |
|
|
|
|
|
|
|
|
|
Redemption of senior notes |
|
— |
|
|
|
— |
|
|
|
(824,557 |
) |
|
Proceeds from issuance of senior notes |
|
200,000 |
|
|
|
— |
|
|
|
875,000 |
|
|
Proceeds from (repayment of) revolving credit facilities, net |
|
61,272 |
|
|
|
115,330 |
|
|
|
(33,396 |
) |
|
Dividend payments |
|
(19,950 |
) |
|
|
(19,847 |
) |
|
|
(17,167 |
) |
|
Payment of debt issuance costs |
|
(4,865 |
) |
|
|
(3,871 |
) |
|
|
(14,483 |
) |
|
Payment of finance lease obligations |
|
(7,785 |
) |
|
|
(10,003 |
) |
|
|
(7,850 |
) |
|
Other |
|
(48 |
) |
|
|
(711 |
) |
|
|
3,616 |
|
|
Net cash from (used in) financing activities |
|
228,624 |
|
|
|
80,898 |
|
|
|
(18,837 |
) |
| Effect of exchange rate changes
on cash and cash equivalents |
|
208 |
|
|
|
(8,526 |
) |
|
|
(1,071 |
) |
| Net increase (decrease) in cash
and cash equivalents |
|
(40,040 |
) |
|
|
8,422 |
|
|
|
(15,488 |
) |
| Cash and cash equivalents,
beginning of year |
|
354,032 |
|
|
|
345,610 |
|
|
|
361,098 |
|
| Cash and cash equivalents, end of
year |
$ |
313,992 |
|
|
$ |
354,032 |
|
|
$ |
345,610 |
|
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, 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 (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 income (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. The following tables set forth the net income
(loss) to Operating EBITDA:
|
|
Q4 |
|
|
Q3 |
|
|
Q4 |
|
|
YTD |
|
|
YTD |
|
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022(1) |
|
| Net income
(loss) |
$ |
(87,216 |
) |
|
$ |
(25,956 |
) |
|
$ |
20,024 |
|
|
$ |
(242,056 |
) |
|
$ |
247,039 |
|
| Income tax provision (recovery) |
|
1,084 |
|
|
|
3,984 |
|
|
|
8,608 |
|
|
|
(27,767 |
) |
|
|
98,264 |
|
| Interest expense |
|
27,245 |
|
|
|
21,863 |
|
|
|
18,768 |
|
|
|
88,246 |
|
|
|
71,499 |
|
| Other expenses (income) |
|
2,492 |
|
|
|
(3,317 |
) |
|
|
(137 |
) |
|
|
(7,197 |
) |
|
|
(24,434 |
) |
| Operating income (loss) |
|
(56,395 |
) |
|
|
(3,426 |
) |
|
|
47,263 |
|
|
|
(188,774 |
) |
|
|
392,368 |
|
| Add: Depreciation and amortization |
|
43,806 |
|
|
|
40,953 |
|
|
|
48,865 |
|
|
|
172,502 |
|
|
|
144,153 |
|
| Add: Impairment of sandalwood business held for sale |
|
33,734 |
|
|
|
— |
|
|
|
— |
|
|
|
33,734 |
|
|
|
— |
|
| Operating EBITDA |
$ |
21,145 |
|
|
$ |
37,527 |
|
|
$ |
96,128 |
|
|
$ |
17,462 |
|
|
$ |
536,521 |
|
| ______________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) Includes results of the Torgau facility
since September 30, 2022. |
Mercer (NASDAQ:MERC)
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Mercer (NASDAQ:MERC)
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From Apr 2023 to Apr 2024
