Mercer International Inc. (Nasdaq: MERC) today reported second
quarter 2022 Operating EBITDA increased to a $145.1 million from
$83.8 million in the second quarter of 2021 and decreased from
$154.5 million in the first quarter of 2022.
In the second quarter of 2022, net income was
$71.4 million (or $1.08 per basic share and $1.07 per diluted
share) compared to $21.4 million (or $0.32 per share) in the second
quarter of 2021 and net income of $88.9 million (or $1.35 per basic
share and $1.34 per diluted share) in the first quarter of
2022.
In the first half of 2022, Operating EBITDA
increased by 81% to $299.5 million from $165.8 million in the same
period of 2021. In the first half of 2022, net income was $160.3
million (or $2.43 per basic share and $2.41 per diluted share)
compared to $27.3 million (or $0.41 per share) in the same period
of 2021.
Mr. Juan Carlos Bueno, the Chief Executive
Officer, stated: “Our strong second quarter operating results were
driven by increased pulp and lumber pricing, continued strong
energy pricing and our Stendal mill’s reversal of it’s wastewater
fee accrual. These positive effects were offset by higher planned
maintenance costs, higher costs for key inputs including fiber,
energy and chemicals, and lower pulp sales volumes. We continue to
see cost inflation for certain inputs, including energy costs.
However, we see our surplus energy sales as a strong hedge against
higher energy prices and we are focused on developing strategies to
manage the cost of our key inputs.
When comparing our second quarter pulp results
to the first quarter, our second quarter was negatively impacted by
higher planned maintenance costs, lower pulp sales volumes and
higher per unit fiber costs. During the quarter our mills were down
for planned maintenance a total of 43 days compared to none in the
first quarter and our Celgar mill was down an additional six days
due to a slower than plan startup. As expected, our fiber costs
were up quarter over quarter, but we are currently expecting that
these costs will be flat in the third quarter with a modest
increase in Germany and a modest decrease in Canada.
In July 2022 our Stendal mill had a fire in its
woodyard which did not damage the mill's operations. We have now
restarted the mill and are ramping up its production. We have
implemented a work around chip in-feed process which is designed to
let the mill operate at about 80% of capacity. We expect the
planning and installation of replacement equipment will take
several months.
Our Friesau sawmill continued its strong
performance in the second quarter achieving record operating
income. The mill’s improvement relative to first quarter was
primarily due to improved lumber pricing in Europe and strong
pricing in the U.S., which were partially offset by higher fiber
prices. In the second quarter of 2022, our solid wood segment
generated operating income of $45.9 million.
Pulp supply demand fundamentals remained strong
throughout the second quarter and resulted in price improvements in
all of our markets. Low customer inventory levels and limited pulp
supply were the main drivers in market tightness. As of June 30,
2022, third party industry quoted NBSK list prices were
approximately $1,485 per ADMT in Europe and net prices were
approximately $1,008 per ADMT in China.
Global logistics challenges are slowly easing
but continue to impact our business primarily in the form of
irregular North American rail traffic, which forces us to use
additional higher cost trucking. We are seeing the railways making
slow progress in unwinding their system backlogs and expect that
these logistics issues will continue to improve going forward.
As we move into the third quarter, we expect
stable pulp prices as a result of low customer inventory levels and
supply constraints. We expect lumber prices in the United States to
be generally stable and prices in Europe to decline from the second
quarter but remain at historically attractive levels in both
markets. Further, we expect continued strong energy demand and
prices in Germany in the third quarter of 2022.
Currently our 2022 capital expenditures are on
track to total approximately $175 million to $200 million. The
majority of these investments are designed to deliver high returns,
help us achieve our ESG objectives and enhance shareholder value. I
am also pleased to announce that our Board has approved an
incremental $27 million investment at our Spokane mass timber
facility. This investment will allow this state-of-the-art facility
to fully utilize a more varied raw material mix and increase finger
joint lumber production. We expect this investment will become a
stepping stone to additional modest investments to increase
cross-laminated timber ("CLT") and glue laminated beam capacity as
our order book grows. We are excited about the potential of this
business given CLT’s lower carbon footprint and faster construction
characteristics compared to traditional construction materials like
concrete and steel. Over time, as we continue to ramp up this
business, I believe our CLT business will become a key component in
our solid wood business.”
____________________
*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 income to Operating
EBITDA.
Consolidated Financial
Results
|
Q2 |
|
|
Q1 |
|
|
Q2 |
|
|
YTD |
|
|
YTD |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands, except per share amounts) |
|
|
Revenues |
$ |
572,326 |
|
|
$ |
592,741 |
|
|
$ |
401,832 |
|
|
$ |
1,165,067 |
|
|
$ |
814,552 |
|
|
Operating income |
$ |
114,031 |
|
|
$ |
122,351 |
|
|
$ |
51,836 |
|
|
$ |
236,382 |
|
|
$ |
102,865 |
|
|
Operating EBITDA |
$ |
145,059 |
|
|
$ |
154,467 |
|
|
$ |
83,791 |
|
|
$ |
299,526 |
|
|
$ |
165,787 |
|
|
Loss on early extinguishment
of debt |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(30,368 |
) |
(1) |
Net income |
$ |
71,372 |
|
|
$ |
88,897 |
|
|
$ |
21,415 |
|
|
$ |
160,269 |
|
|
$ |
27,348 |
|
|
Net income per common
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.08 |
|
|
$ |
1.35 |
|
|
$ |
0.32 |
|
|
$ |
2.43 |
|
|
$ |
0.41 |
|
|
Diluted |
$ |
1.07 |
|
|
$ |
1.34 |
|
|
$ |
0.32 |
|
|
$ |
2.41 |
|
|
$ |
0.41 |
|
|
______________
(1) Redemption of 6.50% senior notes due 2024
and 7.375% senior notes due 2025.
Consolidated – Three Months Ended June 30, 2022 Compared
to Three Months Ended June 30, 2021
Total revenues in the second quarter of 2022
increased by approximately 42% to $572.3 million from $401.8
million in the same quarter of 2021 primarily due to higher pulp
sales volumes and higher pulp, energy and lumber sales
realizations.
In the second quarter of 2022, our energy and
chemical revenues increased to $47.8 million from $16.9 million in
the same quarter of 2021 primarily as a result of higher energy
prices in Germany, which were double those in the same quarter of
2021.
Costs and expenses in the second quarter of 2022
increased by approximately 31% to $458.3 million from $350.0
million in the second quarter of 2021 primarily due to higher pulp
sales volumes and driven by inflationary pressure on our key
production costs such as fiber, energy and chemicals and also
freight costs. Such cost increases were partially offset by the
positive impact of a stronger dollar on our euro and Canadian
dollar denominated costs and expenses.
In the second quarter of 2022, Operating EBITDA
increased by approximately 73% to $145.1 million from $83.8 million
in the same quarter of 2021 primarily due to higher sales
realizations and pulp sales volumes and the positive impact of a
stronger dollar partially offset by higher per unit fiber and other
production costs.
Segment
ResultsPulp
|
Three Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands) |
|
|
Pulp revenues |
$ |
418,579 |
|
|
$ |
297,191 |
|
|
Energy and chemical
revenues |
$ |
41,725 |
|
|
$ |
13,058 |
|
|
Operating income |
$ |
75,471 |
|
|
$ |
13,338 |
|
|
In the second quarter of 2022, pulp segment
operating income increased to $75.5 million from $13.3 million in
the same quarter of 2021 primarily due to higher sales realizations
and sales volumes and the positive impact of a stronger dollar,
partially offset by higher per unit fiber costs and other
production costs.
Pulp revenues in the second quarter of 2022
increased by approximately 41% to $418.6 million from $297.2
million in the same quarter of 2021 due to both higher sales
volumes and sales realizations.
Energy and chemical revenues increased to a
record $41.7 million in the second quarter of 2022 from $13.1
million in the same quarter of 2021 primarily due to higher sales
realizations. During the second quarter of 2022, we benefitted from
strong energy demand and higher energy prices in Germany.
In the second quarter of 2022, third party
industry quoted average list prices for NBSK pulp increased from
the same quarter of 2021 primarily as a result of low customer
inventory levels. Our average NBSK pulp sales realizations
increased by approximately 7% to $890 per ADMT in the second
quarter of 2022 from approximately $830 per ADMT in the same
quarter of 2021.
Costs and expenses in the second quarter of 2022
increased by approximately 30% to $384.8 million from $297.0
million in the second quarter of 2021 primarily due to higher pulp
sales volumes, per unit fiber costs and energy, chemical and
freight costs. The higher costs were partially offset by the
positive impact of a stronger dollar and in the second quarter of
2022, we received German regulatory approval to reverse a
wastewater fee accrual of $13.3 million as a result of completing
certain capital projects.
In the second quarter of 2022 per unit fiber
costs increased by approximately 32% from the same quarter of 2021
primarily due to higher per unit fiber costs for our German mills
as a result of higher demand from other wood consumers such as
heating pellet manufacturers. For our Canadian mills, per unit
fiber costs were flat as demand remained strong in the mills' fiber
baskets. We currently expect per unit fiber costs to be flat in the
third quarter of 2022 with a modest increase in Germany and a
modest decrease in Canada.
Wood Products
|
Three Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands) |
|
|
Lumber revenues |
$ |
96,268 |
|
|
$ |
86,285 |
|
|
Energy revenues |
$ |
5,055 |
|
|
$ |
2,692 |
|
|
Wood residual revenues |
$ |
3,367 |
|
|
$ |
1,462 |
|
|
Operating income |
$ |
45,853 |
|
|
$ |
42,314 |
|
|
In the second quarter of 2022, our
wood products segment operating income increased approximately 9%
to a record $45.9 million from $42.3 million in the same quarter of
2021 primarily due to higher sales realizations partially offset by
higher per unit fiber costs.
Average lumber sales realizations increased by
approximately 10% to $867 per Mfbm in the second quarter of 2022
from approximately $789 per Mfbm in the same quarter of 2021 as we
benefitted from strong sales to the U.S. market and its high prices
in the first part of the quarter. Although U.S. lumber pricing
decreased in the later part of the current quarter due to concerns
of rising interest rates and inflationary pressures, prices were
still at historically attractive levels. European lumber pricing
increased due to steady demand with limited supply.
In the second quarter of 2022 per unit fiber
costs increased by approximately 37% from the same quarter of 2021
as a result of both strong demand for sawlogs and the use of more
green logs as producers have largely worked through the
availability of lower cost beetle damaged timber. We currently
expect per unit fiber costs to increase in the third quarter of
2022.
Consolidated – Six Months Ended June 30,
2022 Compared to Six Months Ended June 30, 2021Total
revenues for the first half of 2022 increased by approximately 43%
to $1,165.1 million from $814.6 million in the first half of 2021
primarily due to higher sales realizations and higher pulp sales
volumes.
Costs and expenses in the first half of 2022
increased by approximately 30% to $928.7 million from $711.7
million in the first half of 2021 primarily due to higher pulp
sales volumes, per unit fiber costs and energy, freight and
chemical costs partially offset by the positive impact of a
stronger dollar on our euro and Canadian dollar denominated costs
and expenses.
In the first half of 2022, Operating EBITDA
increased by approximately 81% to $299.5 million from $165.8
million in the same period of 2021 primarily due to higher sales
realizations and pulp sales volumes and the positive impact of a
stronger dollar partially offset by higher per unit fiber costs and
other production costs.
LiquidityAs of June 30, 2022,
we had cash, cash equivalents and a term deposit aggregating $494.9
million and approximately $276.2 million available under our
revolving credit facilities providing us with aggregate liquidity
of about $771.1 million.
Quarterly DividendA quarterly
dividend of $0.075 per share will be paid on October 5, 2022 to all
shareholders of record on September 28, 2022. Future dividends will
be subject to Board approval and may be adjusted as business and
industry conditions warrant.
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
July 29, 2022 at 11:00 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/ka7jrybt 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 site 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, 550 million board feet of lumber and 140 thousand cubic
meters of CLT. To obtain further information on the company, please
visit its web site 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
|
Q2 |
|
|
Q1 |
|
|
Q2 |
|
|
YTD |
|
|
YTD |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands, except per share amounts) |
|
|
Pulp segment revenues |
$ |
460,304 |
|
|
$ |
485,931 |
|
|
$ |
310,249 |
|
|
$ |
946,235 |
|
|
$ |
650,005 |
|
|
Wood products segment revenues |
|
104,690 |
|
|
|
101,033 |
|
|
|
90,439 |
|
|
|
205,723 |
|
|
|
161,426 |
|
|
Corporate and other revenues |
|
7,332 |
|
|
|
5,777 |
|
|
|
1,144 |
|
|
|
13,109 |
|
|
|
3,121 |
|
|
Total revenues |
$ |
572,326 |
|
|
$ |
592,741 |
|
|
$ |
401,832 |
|
|
$ |
1,165,067 |
|
|
$ |
814,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment operating income |
$ |
75,471 |
|
|
$ |
86,236 |
|
|
$ |
13,338 |
|
|
$ |
161,707 |
|
|
$ |
38,634 |
|
|
Wood products segment operating income |
|
45,853 |
|
|
|
40,479 |
|
|
|
42,314 |
|
|
|
86,332 |
|
|
|
70,291 |
|
|
Corporate and other operating loss |
|
(7,293 |
) |
|
|
(4,364 |
) |
|
|
(3,816 |
) |
|
|
(11,657 |
) |
|
|
(6,060 |
) |
|
Total operating income |
$ |
114,031 |
|
|
$ |
122,351 |
|
|
$ |
51,836 |
|
|
$ |
236,382 |
|
|
$ |
102,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment depreciation and amortization |
$ |
27,001 |
|
|
$ |
27,684 |
|
|
$ |
27,967 |
|
|
$ |
54,685 |
|
|
$ |
55,013 |
|
|
Wood products segment depreciation and amortization |
|
3,234 |
|
|
|
3,637 |
|
|
|
3,748 |
|
|
|
6,871 |
|
|
|
7,471 |
|
|
Corporate and other depreciation and amortization |
|
793 |
|
|
|
795 |
|
|
|
240 |
|
|
|
1,588 |
|
|
|
438 |
|
|
Total depreciation and
amortization |
$ |
31,028 |
|
|
$ |
32,116 |
|
|
$ |
31,955 |
|
|
$ |
63,144 |
|
|
$ |
62,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating EBITDA |
$ |
145,059 |
|
|
$ |
154,467 |
|
|
$ |
83,791 |
|
|
$ |
299,526 |
|
|
$ |
165,787 |
|
|
Loss on early extinguishment
of debt |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(30,368 |
) |
(1) |
Income tax provision |
$ |
(34,126 |
) |
|
$ |
(24,236 |
) |
|
$ |
(10,685 |
) |
|
$ |
(58,362 |
) |
|
$ |
(13,383 |
) |
|
Net income |
$ |
71,372 |
|
|
$ |
88,897 |
|
|
$ |
21,415 |
|
|
$ |
160,269 |
|
|
$ |
27,348 |
|
|
Net income per common
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.08 |
|
|
$ |
1.35 |
|
|
$ |
0.32 |
|
|
$ |
2.43 |
|
|
$ |
0.41 |
|
|
Diluted |
$ |
1.07 |
|
|
$ |
1.34 |
|
|
$ |
0.32 |
|
|
$ |
2.41 |
|
|
$ |
0.41 |
|
|
Common shares outstanding at
period end |
|
66,167 |
|
|
|
66,132 |
|
|
|
66,037 |
|
|
|
66,167 |
|
|
|
66,037 |
|
|
______________
(1) Redemption of 6.50% senior notes due 2024
and 7.375% senior notes due 2025.
Summary Operating Highlights
|
Q2 |
|
|
Q1 |
|
|
Q2 |
|
|
YTD |
|
|
YTD |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
Pulp
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp production ('000 ADMTs) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
418.3 |
|
|
|
435.5 |
|
|
|
355.1 |
|
|
|
853.8 |
|
|
|
752.0 |
|
|
NBHK |
|
51.6 |
|
|
|
56.8 |
|
|
|
4.5 |
|
|
|
108.4 |
|
|
|
86.1 |
|
|
Annual maintenance downtime ('000 ADMTs) |
|
54.2 |
|
|
|
— |
|
|
|
173.1 |
|
|
|
54.2 |
|
|
|
210.9 |
|
|
Annual maintenance downtime (days) |
|
43 |
|
|
|
— |
|
|
|
117 |
|
|
|
43 |
|
|
|
144 |
|
|
Pulp sales ('000 ADMTs) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
405.7 |
|
|
|
505.1 |
|
|
|
330.4 |
|
|
|
910.8 |
|
|
|
749.1 |
|
|
NBHK |
|
65.8 |
|
|
|
49.9 |
|
|
|
30.3 |
|
|
|
115.8 |
|
|
|
99.4 |
|
|
Average NBSK pulp prices ($/ADMT)(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
1,437 |
|
|
|
1,330 |
|
|
|
1,288 |
|
|
|
1,383 |
|
|
|
1,163 |
|
|
China |
|
1,008 |
|
|
|
899 |
|
|
|
962 |
|
|
|
954 |
|
|
|
922 |
|
|
North America |
|
1,743 |
|
|
|
1,527 |
|
|
|
1,598 |
|
|
|
1,635 |
|
|
|
1,450 |
|
|
Average NBHK pulp prices ($/ADMT)(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China |
|
815 |
|
|
|
668 |
|
|
|
767 |
|
|
|
742 |
|
|
|
729 |
|
|
North America |
|
1,517 |
|
|
|
1,312 |
|
|
|
1,297 |
|
|
|
1,414 |
|
|
|
1,158 |
|
|
Average pulp sales realizations ($/ADMT)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
890 |
|
|
|
812 |
|
|
|
830 |
|
|
|
847 |
|
|
|
739 |
|
|
NBHK |
|
843 |
|
|
|
695 |
|
|
|
672 |
|
|
|
780 |
|
|
|
566 |
|
|
Energy production ('000 MWh)(3) |
|
496.6 |
|
|
|
531.5 |
|
|
|
362.0 |
|
|
|
1,028.1 |
|
|
|
881.1 |
|
|
Energy sales ('000 MWh)(3) |
|
199.3 |
|
|
|
194.7 |
|
|
|
130.9 |
|
|
|
394.0 |
|
|
|
332.0 |
|
|
Average energy sales realizations ($/MWh)(3) |
|
186 |
|
|
|
186 |
|
|
|
90 |
|
|
|
186 |
|
|
|
94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood Products
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lumber production (MMfbm) |
|
112.2 |
|
|
|
115.6 |
|
|
|
116.7 |
|
|
|
227.8 |
|
|
|
234.5 |
|
|
Lumber sales (MMfbm) |
|
111.0 |
|
|
|
109.9 |
|
|
|
109.3 |
|
|
|
220.9 |
|
|
|
217.5 |
|
|
Average lumber sales realizations ($/Mfbm) |
|
867 |
|
|
840 |
|
|
789 |
|
|
|
854 |
|
|
706 |
|
|
Energy production and sales ('000 MWh) |
|
25.5 |
|
|
|
24.5 |
|
|
|
21.0 |
|
|
|
50.0 |
|
|
|
37.3 |
|
|
Average energy sales realizations ($/MWh) |
|
198 |
|
|
211 |
|
|
128 |
|
|
205 |
|
|
129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Spot Currency
Exchange Rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ / €(4) |
|
1.0646 |
|
|
|
1.1216 |
|
|
|
1.2050 |
|
|
|
1.0929 |
|
|
|
1.2048 |
|
|
$ / C$(4) |
|
0.7836 |
|
|
0.7897 |
|
|
0.8142 |
|
|
0.7866 |
|
|
0.8026 |
|
|
______________
(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 Cariboo mill,
which is accounted for using the equity
method. (4) 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 EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
Revenues |
|
$ |
572,326 |
|
|
$ |
401,832 |
|
|
$ |
1,165,067 |
|
|
$ |
814,552 |
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales, excluding depreciation and amortization |
|
|
403,671 |
|
|
|
297,826 |
|
|
|
819,766 |
|
|
|
608,023 |
|
|
Cost of sales depreciation and amortization |
|
|
31,004 |
|
|
|
31,935 |
|
|
|
63,101 |
|
|
|
62,881 |
|
|
Selling, general and administrative expenses |
|
|
23,620 |
|
|
|
20,235 |
|
|
|
45,818 |
|
|
|
40,783 |
|
|
Operating income |
|
|
114,031 |
|
|
|
51,836 |
|
|
|
236,382 |
|
|
|
102,865 |
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(17,332 |
) |
|
|
(17,130 |
) |
|
|
(34,796 |
) |
|
|
(36,149 |
) |
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(30,368 |
) |
|
Other income (expenses) |
|
|
8,799 |
|
|
|
(2,606 |
) |
|
|
17,045 |
|
|
|
4,383 |
|
|
Total other expenses, net |
|
|
(8,533 |
) |
|
|
(19,736 |
) |
|
|
(17,751 |
) |
|
|
(62,134 |
) |
|
Income before income taxes |
|
|
105,498 |
|
|
|
32,100 |
|
|
|
218,631 |
|
|
|
40,731 |
|
|
Income tax provision |
|
|
(34,126 |
) |
|
|
(10,685 |
) |
|
|
(58,362 |
) |
|
|
(13,383 |
) |
|
Net income |
|
$ |
71,372 |
|
|
$ |
21,415 |
|
|
$ |
160,269 |
|
|
$ |
27,348 |
|
|
Net income per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.08 |
|
|
$ |
0.32 |
|
|
$ |
2.43 |
|
|
$ |
0.41 |
|
|
Diluted |
|
$ |
1.07 |
|
|
$ |
0.32 |
|
|
$ |
2.41 |
|
|
$ |
0.41 |
|
|
Dividends declared per common
share |
|
$ |
0.0750 |
|
|
$ |
0.0650 |
|
|
$ |
0.1500 |
|
|
$ |
0.1300 |
|
|
MERCER INTERNATIONAL
INC.INTERIM CONSOLIDATED BALANCE
SHEETS(Unaudited)(In thousands,
except share and per share data)
|
|
June 30, |
|
|
December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
419,861 |
|
|
$ |
345,610 |
|
|
Term deposit |
|
|
75,000 |
|
|
|
— |
|
|
Accounts receivable, net |
|
|
308,067 |
|
|
|
345,345 |
|
|
Inventories |
|
|
348,837 |
|
|
|
356,731 |
|
|
Prepaid expenses and other |
|
|
17,349 |
|
|
|
16,619 |
|
|
Total current assets |
|
|
1,169,114 |
|
|
|
1,064,305 |
|
|
Property, plant and equipment, net |
|
|
1,095,340 |
|
|
|
1,135,631 |
|
|
Investment in joint ventures |
|
|
46,584 |
|
|
|
49,651 |
|
|
Amortizable intangible assets, net |
|
|
44,901 |
|
|
|
47,902 |
|
|
Operating lease right-of-use assets |
|
|
9,958 |
|
|
|
9,712 |
|
|
Pension asset |
|
|
3,888 |
|
|
|
4,136 |
|
|
Other long-term assets |
|
|
44,672 |
|
|
|
38,718 |
|
|
Deferred income tax |
|
|
1,259 |
|
|
|
1,177 |
|
|
Total assets |
|
$ |
2,415,716 |
|
|
$ |
2,351,232 |
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable and other |
|
$ |
273,122 |
|
|
$ |
282,307 |
|
|
Pension and other post-retirement benefit obligations |
|
|
782 |
|
|
|
817 |
|
|
Total current liabilities |
|
|
273,904 |
|
|
|
283,124 |
|
|
Long-term debt |
|
|
1,245,906 |
|
|
|
1,237,545 |
|
|
Pension and other post-retirement benefit obligations |
|
|
19,498 |
|
|
|
21,252 |
|
|
Operating lease liabilities |
|
|
7,161 |
|
|
|
6,574 |
|
|
Other long-term liabilities |
|
|
13,227 |
|
|
|
13,590 |
|
|
Deferred income tax |
|
|
103,898 |
|
|
|
95,123 |
|
|
Total liabilities |
|
|
1,663,594 |
|
|
|
1,657,208 |
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
|
|
Common shares $1 par value; 200,000,000 authorized; 66,167,000
issued and outstanding (2021 – 66,037,000) |
|
|
66,132 |
|
|
|
65,988 |
|
|
Additional paid-in capital |
|
|
350,224 |
|
|
|
347,902 |
|
|
Retained earnings |
|
|
521,274 |
|
|
|
370,927 |
|
|
Accumulated other comprehensive loss |
|
|
(185,508 |
) |
|
|
(90,793 |
) |
|
Total shareholders’
equity |
|
|
752,122 |
|
|
|
694,024 |
|
|
Total liabilities and
shareholders’ equity |
|
$ |
2,415,716 |
|
|
$ |
2,351,232 |
|
|
MERCER INTERNATIONAL
INC.INTERIM CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)(In
thousands)
|
|
Three Months EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
Cash flows from (used in)
operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
71,372 |
|
|
$ |
21,415 |
|
|
$ |
160,269 |
|
|
$ |
27,348 |
|
|
Adjustments to reconcile net income to cash flows from operating
activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
31,028 |
|
|
|
31,955 |
|
|
|
63,144 |
|
|
|
62,922 |
|
|
Deferred income tax provision |
|
|
6,624 |
|
|
|
1,276 |
|
|
|
15,007 |
|
|
|
2,480 |
|
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,368 |
|
|
Defined benefit pension plans and other post-retirement benefit
plan expense |
|
|
439 |
|
|
|
856 |
|
|
|
877 |
|
|
|
1,775 |
|
|
Stock compensation expense |
|
|
1,517 |
|
|
|
975 |
|
|
|
2,466 |
|
|
|
1,585 |
|
|
Foreign exchange transaction losses (gains) |
|
|
(9,591 |
) |
|
|
1,966 |
|
|
|
(13,419 |
) |
|
|
(6,640 |
) |
|
Other |
|
|
30 |
|
|
|
356 |
|
|
|
(771 |
) |
|
|
(260 |
) |
|
Defined benefit pension plans and other post-retirement benefit
plan contributions |
|
|
(1,200 |
) |
|
|
(1,202 |
) |
|
|
(2,394 |
) |
|
|
(2,125 |
) |
|
Changes in working capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
65,509 |
|
|
|
16,364 |
|
|
|
13,382 |
|
|
|
3,941 |
|
|
Inventories |
|
|
(13,342 |
) |
|
|
(21,964 |
) |
|
|
(15,067 |
) |
|
|
(42,763 |
) |
|
Accounts payable and accrued expenses |
|
|
3,813 |
|
|
|
30,167 |
|
|
|
3,246 |
|
|
|
34,603 |
|
|
Other |
|
|
(1,658 |
) |
|
|
(1,012 |
) |
|
|
(3,389 |
) |
|
|
(1,794 |
) |
|
Net cash from (used in) operating activities |
|
|
154,541 |
|
|
|
81,152 |
|
|
|
223,351 |
|
|
|
111,440 |
|
|
Cash flows from (used in)
investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(47,028 |
) |
|
|
(62,124 |
) |
|
|
(80,321 |
) |
|
|
(87,386 |
) |
|
Insurance proceeds |
|
|
— |
|
|
|
20,048 |
|
|
|
6,410 |
|
|
|
20,048 |
|
|
Purchase of term deposit |
|
|
(75,000 |
) |
|
|
— |
|
|
|
(75,000 |
) |
|
|
— |
|
|
Purchase of amortizable intangible assets |
|
|
(25 |
) |
|
|
(568 |
) |
|
|
(85 |
) |
|
|
(1,209 |
) |
|
Other |
|
|
499 |
|
|
|
285 |
|
|
|
652 |
|
|
|
(109 |
) |
|
Net cash from (used in) investing activities |
|
|
(121,554 |
) |
|
|
(42,359 |
) |
|
|
(148,344 |
) |
|
|
(68,656 |
) |
|
Cash flows from (used in)
financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption of senior notes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(824,557 |
) |
|
Proceeds from issuance of senior notes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
875,000 |
|
|
Proceeds from (repayment of) revolving credit facilities, net |
|
|
(13,066 |
) |
|
|
(42,042 |
) |
|
|
17,438 |
|
|
|
(57,112 |
) |
|
Dividend payments |
|
|
(4,960 |
) |
|
|
(4,289 |
) |
|
|
(4,960 |
) |
|
|
(4,289 |
) |
|
Payment of debt issuance costs |
|
|
— |
|
|
|
— |
|
|
|
(1,184 |
) |
|
|
(14,414 |
) |
|
Proceeds from government grants |
|
|
— |
|
|
|
— |
|
|
|
1,067 |
|
|
|
8,532 |
|
|
Payment of finance lease obligations |
|
|
(1,671 |
) |
|
|
(1,833 |
) |
|
|
(6,606 |
) |
|
|
(3,536 |
) |
|
Other |
|
|
277 |
|
|
|
1 |
|
|
|
(566 |
) |
|
|
3,625 |
|
|
Net cash from (used in) financing activities |
|
|
(19,420 |
) |
|
|
(48,163 |
) |
|
|
5,189 |
|
|
|
(16,751 |
) |
|
Effect of exchange rate changes
on cash and cash equivalents |
|
|
(4,411 |
) |
|
|
(1,179 |
) |
|
|
(5,945 |
) |
|
|
(2,597 |
) |
|
Net increase (decrease) in cash
and cash equivalents |
|
|
9,156 |
|
|
|
(10,549 |
) |
|
|
74,251 |
|
|
|
23,436 |
|
|
Cash and cash equivalents,
beginning of period |
|
|
410,705 |
|
|
|
395,083 |
|
|
|
345,610 |
|
|
|
361,098 |
|
|
Cash and cash equivalents, end of
period |
|
$ |
419,861 |
|
|
$ |
384,534 |
|
|
$ |
419,861 |
|
|
$ |
384,534 |
|
|
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 operating income
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 to Operating EBITDA:
|
Q2 |
|
|
Q1 |
|
|
Q2 |
|
|
YTD |
|
|
YTD |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
Net income |
$ |
71,372 |
|
|
$ |
88,897 |
|
|
$ |
21,415 |
|
|
$ |
160,269 |
|
|
$ |
27,348 |
|
|
Income tax provision |
|
34,126 |
|
|
|
24,236 |
|
|
|
10,685 |
|
|
|
58,362 |
|
|
|
13,383 |
|
|
Interest expense |
|
17,332 |
|
|
|
17,464 |
|
|
|
17,130 |
|
|
|
34,796 |
|
|
|
36,149 |
|
|
Loss on early extinguishment
of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,368 |
|
|
Other expense (income) |
|
(8,799 |
) |
|
|
(8,246 |
) |
|
|
2,606 |
|
|
|
(17,045 |
) |
|
|
(4,383 |
) |
|
Operating income |
|
114,031 |
|
|
|
122,351 |
|
|
|
51,836 |
|
|
|
236,382 |
|
|
|
102,865 |
|
|
Add: Depreciation and
amortization |
|
31,028 |
|
|
|
32,116 |
|
|
|
31,955 |
|
|
|
63,144 |
|
|
|
62,922 |
|
|
Operating EBITDA |
$ |
145,059 |
|
|
$ |
154,467 |
|
|
$ |
83,791 |
|
|
$ |
299,526 |
|
|
$ |
165,787 |
|
|
Mercer (NASDAQ:MERC)
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From Sep 2024 to Oct 2024
Mercer (NASDAQ:MERC)
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From Oct 2023 to Oct 2024