Mercer International Inc. (Nasdaq: MERC) today reported fourth
quarter 2022 Operating EBITDA of $96.1 million a decrease from
$164.9 million in the fourth quarter of 2021 and $140.9 million in
the third quarter of 2022.
In the fourth quarter of 2022, net income was
$20.0 million (or $0.30 per share) compared to $74.5 million (or
$1.13 per basic share and $1.12 per diluted share) in the fourth
quarter of 2021 and net income of $66.7 million (or $1.01 per basic
share and $1.00 per diluted share) in the third quarter of
2022.
In 2022, Operating EBITDA increased by 12% to a
record $536.5 million from $478.8 million in 2021. In 2022, net
income was a record $247.0 million (or $3.74 per basic share and
$3.71 per diluted share) from $171.0 million (or $2.59 per basic
share and $2.58 per diluted share) in 2021.
Mr. Juan Carlos Bueno, the Chief Executive
Officer, stated: “Our solid fourth quarter operating results
reflect strong pulp sales, which were however more than offset by
lower sales prices, higher planned maintenance and fiber costs and
the negative impact of the weaker US dollar compared to our third
quarter operating results.
Total pulp production increased approximately 6%
compared to the third quarter primarily due to improved production
at our Stendal mill as they ramped up production following the
third quarter shut down caused by a fire in its wood yard. The
Stendal mill is currently running at or about capacity and the
repairs related to the fire are expected to be completed in the
second quarter. Pulp sales volumes also increased relative to the
third quarter in proportion to the pulp production increase.
Our solid wood segment’s fourth quarter
operating results include the results of our recently acquired
Torgau mill. Overall, this segment’s operating results were
negatively impacted by lower sales prices, which were partially
offset by improved lumber and energy sales volumes. During the
quarter we achieved approximately $6 million of synergies on an
annualized basis from our Torgau operations. These primarily came
in the form of optimizing fiber utilizations among our mills. Our
integration efforts are ongoing as we work to capture all available
synergies.
Lower energy prices and the impact of the German
energy windfall tax negatively affected our fourth quarter results
by approximately $49 million compared to the prior quarter. The
decline is the result of lower energy prices in Germany in the
fourth quarter as warm weather and strong natural gas storage
levels took significant pressure off the market electricity price.
Effective December 1, 2022, Germany implemented a windfall tax
which taxes revenues at 90% above a “base threshold”. Energy prices
in Germany ended the year at about such base threshold level.
In the fourth quarter we also experienced
significant fiber cost increases as demand for low quality pulp
wood in Germany was being driven by the energy sector and in
Western Canada there was lower fiber availability due to sawmill
curtailments. In the fourth quarter our fiber costs increased
roughly $21 million compared to the prior quarter. Planned major
maintenance negatively impacted EBITDA by almost $20 million in the
current quarter compared to the third quarter.
In China we currently expect modestly higher
NBSK pulp prices in the first part of 2023 due to China's reopening
after lifting of COVID-19 restrictions and the seasonal demand
increase after the lunar new year. We currently expect modestly
declining NBSK pulp prices in Europe and North America in the first
half of 2023 as a result of lower demand due to inflationary
pressures negatively impacting paper demand. For NBHK pulp we
currently expect prices to decrease in the first half of 2023 due
to additional supply coming online.
In our solid wood segment, we currently expect
lumber prices to modestly increase in the first half of 2023 due to
producer curtailments, low customer inventory levels and the start
of the construction season. These positive impacts will be
partially offset by lower demand caused by continued economic
uncertainty due to inflation and higher interest rates. ”
Mr. Bueno concluded: “As I look to 2023, I am
excited about Mercer’s strong operational foundation and the many
options it gives us as we look to continue to grow and diversify
our solid wood and bio-products revenues. Last year Mercer Mass
Timber built up the engineering and design team and enhanced the
operations to position it to bid on major construction projects and
fill out its order book. We will continue to run the Company based
on continuous improvement to enhance efficiency, lower costs and
manage our liquidity prudently to enhance value.”
____________________
*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
|
Q4 |
|
|
Q3 |
|
|
Q4 |
|
|
YTD |
|
|
YTD |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
(1) |
2021 |
|
|
|
(in thousands, except per share amounts) |
|
|
Revenues |
$ |
583,056 |
|
|
$ |
532,814 |
|
|
$ |
518,957 |
|
|
$ |
2,280,937 |
|
|
$ |
1,803,255 |
|
|
Operating income |
$ |
47,263 |
|
|
$ |
108,723 |
|
|
$ |
129,963 |
|
|
$ |
392,368 |
|
|
$ |
346,583 |
|
|
Operating EBITDA |
$ |
96,128 |
|
|
$ |
140,867 |
|
|
$ |
164,925 |
|
|
$ |
536,521 |
|
|
$ |
478,782 |
|
|
Loss on early extinguishment
of debt |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(30,368 |
) |
(2) |
Net income |
$ |
20,024 |
|
|
$ |
66,746 |
|
|
$ |
74,522 |
|
|
$ |
247,039 |
|
|
$ |
170,988 |
|
|
Net income per common
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.30 |
|
|
$ |
1.01 |
|
|
$ |
1.13 |
|
|
$ |
3.74 |
|
|
$ |
2.59 |
|
|
Diluted |
$ |
0.30 |
|
|
$ |
1.00 |
|
|
$ |
1.12 |
|
|
$ |
3.71 |
|
|
$ |
2.58 |
|
|
______________(1) Results of Torgau included
from the date of acquisition on September 30, 2022.(2) Redemption
of 6.50% senior notes due 2024 and 7.375% senior notes due
2025.
Consolidated – Three Months Ended
December 31, 2022 Compared to Three Months Ended December 31,
2021
Total revenues in the fourth quarter of 2022
increased by approximately 12% to $583.1 million from $519.0
million in the same quarter of 2021 primarily due to higher pulp
sales realizations and the inclusion of the Torgau facility from
September 30, 2022 partially offset by lower sales volumes and
lumber sales realizations.
Costs and expenses in the fourth quarter of 2022
increased by approximately 38% to $535.8 million from $389.0
million in the fourth quarter of 2021 due to the inclusion of
Torgau, higher per unit fiber and chemical costs and maintenance
costs partially offset by the positive impact of a stronger dollar
on our euro and Canadian dollar denominated costs and expenses and
a lower pulp sales volume.
In the fourth quarter of 2022, Operating EBITDA
decreased by approximately 42% to $96.1 million from $164.9 million
in the same quarter of 2021 primarily due to higher per unit fiber
and chemical costs and higher maintenance costs partially offset by
higher pulp sales realizations and the positive impact of a
stronger dollar.
Segment Results
Pulp
|
Three Months Ended December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands) |
|
|
Pulp revenues |
$ |
425,421 |
|
|
$ |
400,379 |
|
|
Energy and chemical
revenues |
$ |
37,804 |
|
|
$ |
35,966 |
|
|
Operating income |
$ |
68,972 |
|
|
$ |
113,172 |
|
|
|
|
|
|
|
|
|
|
|
In the fourth quarter of 2022, pulp segment
operating income decreased by approximately 39% to $69.0 million
from $113.2 million in the same quarter of 2021 primarily due to
higher per unit fiber and chemical costs and higher maintenance
costs partially offset by higher realized prices and the positive
impact of a stronger dollar.
Pulp revenues in the fourth quarter of 2022
increased by approximately 6% to $425.4 million from $400.4 million
in the same quarter of 2021 due to higher sales realizations
partially offset by lower sales volumes. In the fourth 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 16% to $913 per ADMT in the
fourth quarter of 2022 from approximately $784 per ADMT in the same
quarter of 2021.
In the fourth quarter of 2022 compared to the
same quarter of 2021, we had a positive impact of approximately
$27.4 million in operating income due to foreign exchange,
primarily as a result of the effect of the stronger dollar on our
euro and Canadian dollar denominated costs and expenses.
Costs and expenses in the fourth quarter of 2022
increased by approximately 22% to $394.3 million from $323.3
million in the fourth quarter of 2021 primarily due to higher per
unit fiber and chemical costs and higher maintenance costs
partially offset by the positive impact of a stronger dollar and
lower pulp sales volumes. In the fourth quarter of 2022, our pulp
mills had 21 days of annual maintenance downtime compared to no
annual maintenance downtime in the fourth quarter of 2021.
In the fourth quarter of 2022 per unit fiber
costs increased by approximately 43% from the same quarter of 2021
due to higher per unit fiber costs for all of our mills. Our German
mills had higher per unit fiber costs as a result of strong demand
from other wood consumers such as heating pellet manufacturers. For
our Canadian mills, per unit fiber costs increased due to strong
demand in the mills' fiber baskets and for our Celgar mill a
decrease in the availability of wood chips due to regional sawmill
curtailments. In the first quarter of 2023, we currently expect
modestly lower per unit fiber costs in Germany due to lower demand
for wood for energy purposes and generally flat per unit fiber
costs in Canada.
Solid Wood
|
Three Months Ended December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands) |
|
|
Lumber revenues |
$ |
45,041 |
|
|
$ |
71,965 |
|
|
Energy revenues |
$ |
7,310 |
|
|
$ |
4,940 |
|
|
Manufactured products
revenues |
$ |
5,583 |
|
|
$ |
2,391 |
|
|
Pallet revenues |
$ |
36,063 |
|
|
$ |
— |
|
|
Biofuel revenues |
$ |
17,691 |
|
|
$ |
— |
|
|
Wood residual revenues |
$ |
6,722 |
|
|
$ |
2,027 |
|
|
Operating income (loss) |
$ |
(14,281 |
) |
|
$ |
17,852 |
|
|
|
|
|
|
|
|
|
|
|
In the fourth quarter of 2022, the solid wood
segment had an operating loss of $14.3 million compared to
operating income of $17.9 million in the same quarter of 2021
primarily due to lower sales realizations.
Average lumber sales realizations decreased by
approximately 34% to $454 per Mfbm in the fourth quarter of 2022
from approximately $689 per Mfbm in the same quarter of 2021 due to
lower demand in both the European and U.S. markets. Demand in both
the European and U.S. markets was negatively impacted by rising
interest rates, inflationary pressures and an uncertain economic
outlook.
Fiber costs were approximately 75% of our lumber
cash production costs in the fourth quarter of 2022. In the fourth
quarter of 2022, per unit fiber costs for our Friesau sawmill were
flat when compared to the same quarter of 2021. We currently expect
per unit fiber costs to modestly decrease in the first quarter of
2023.
Consolidated – Year Ended December 31,
2022 Compared to Year Ended December 31, 2021
Total revenues in 2022 increased by
approximately 26% to a record $2,280.9 million from $1,803.3
million in 2021 primarily due to higher sales realizations, higher
pulp sales volumes and the inclusion of revenues from our Torgau
facility since September 30, 2022. These increases were partially
offset by the negative impact of a stronger dollar on our euro
denominated energy and European lumber revenues.
Costs and expenses in 2022 increased by
approximately 30% to $1,888.6 million from $1,456.7 million in 2021
primarily due to higher per unit fiber, freight, chemical and
energy costs, the inclusion of Torgau's results and a higher pulp
sales volume partially offset by the positive impact of a stronger
dollar on our euro and Canadian dollar denominated costs and
expenses.
In 2022, Operating EBITDA increased by
approximately 12% to a record $536.5 million from $478.8 million in
2021 as higher sales realizations, the positive impact of a
stronger dollar and higher pulp sales volumes were only partially
offset by higher per unit fiber and other production and freight
costs.
Liquidity
As of December 31, 2022, we had cash and cash
equivalents of $354.0 million and approximately $281.6 million
available under our revolving credit facilities providing us with
aggregate liquidity of about $635.6 million.
Quarterly Dividend
A quarterly dividend of $0.075 per share will be
paid on April 5, 2023 to all shareholders of record on March 29,
2023. Future dividends are 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 17, 2023 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/9vbapy7e 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, 960 million board feet of lumber, 140 thousand cubic meters
of CLT, 17 million pallets and 230,000 metric tonnes of biofuels.
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
|
Q4 |
|
|
Q3 |
|
|
Q4 |
|
|
YTD |
|
|
YTD |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
(1) |
2021 |
|
|
|
(in thousands, except per share amounts) |
|
|
Pulp segment revenues |
$ |
463,225 |
|
|
$ |
456,657 |
|
|
$ |
436,345 |
|
|
$ |
1,866,117 |
|
|
$ |
1,483,093 |
|
|
Solid wood segment revenues |
|
118,410 |
|
|
|
74,266 |
|
|
|
81,323 |
|
|
|
408,458 |
|
|
|
313,472 |
|
|
Corporate and other revenues |
|
1,421 |
|
|
|
1,891 |
|
|
|
1,289 |
|
|
|
6,362 |
|
|
|
6,690 |
|
|
Total revenues |
$ |
583,056 |
|
|
$ |
532,814 |
|
|
$ |
518,957 |
|
|
$ |
2,280,937 |
|
|
$ |
1,803,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment operating income |
$ |
68,972 |
|
|
$ |
109,985 |
|
|
$ |
113,172 |
|
|
$ |
340,664 |
|
|
$ |
251,724 |
|
|
Solid wood segment operating income (loss) |
|
(14,281 |
) |
|
|
2,896 |
|
|
|
17,852 |
|
|
|
70,642 |
|
|
|
106,092 |
|
|
Corporate and other operating loss |
|
(7,428 |
) |
|
|
(4,158 |
) |
|
|
(1,061 |
) |
|
|
(18,938 |
) |
|
|
(11,233 |
) |
|
Total operating income |
$ |
47,263 |
|
|
$ |
108,723 |
|
|
$ |
129,963 |
|
|
$ |
392,368 |
|
|
$ |
346,583 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment depreciation and amortization |
$ |
29,199 |
|
|
$ |
28,174 |
|
|
$ |
30,298 |
|
|
$ |
112,058 |
|
|
$ |
115,293 |
|
|
Solid wood segment depreciation and amortization |
|
19,451 |
|
|
|
3,733 |
|
|
|
4,288 |
|
|
|
31,170 |
|
|
|
15,784 |
|
|
Corporate and other depreciation and amortization |
|
215 |
|
|
|
237 |
|
|
|
376 |
|
|
|
925 |
|
|
|
1,122 |
|
|
Total depreciation and
amortization |
$ |
48,865 |
|
|
$ |
32,144 |
|
|
$ |
34,962 |
|
|
$ |
144,153 |
|
|
$ |
132,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating EBITDA |
$ |
96,128 |
|
|
$ |
140,867 |
|
|
$ |
164,925 |
|
|
$ |
536,521 |
|
|
$ |
478,782 |
|
|
Loss on early extinguishment
of debt |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(30,368 |
) |
(2) |
Income tax provision |
$ |
(8,608 |
) |
|
$ |
(31,294 |
) |
|
$ |
(43,706 |
) |
|
$ |
(98,264 |
) |
|
$ |
(89,579 |
) |
|
Net income |
$ |
20,024 |
|
|
$ |
66,746 |
|
|
$ |
74,522 |
|
|
$ |
247,039 |
|
|
$ |
170,988 |
|
|
Net income per common
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.30 |
|
|
$ |
1.01 |
|
|
$ |
1.13 |
|
|
$ |
3.74 |
|
|
$ |
2.59 |
|
|
Diluted |
$ |
0.30 |
|
|
$ |
1.00 |
|
|
$ |
1.12 |
|
|
$ |
3.71 |
|
|
$ |
2.58 |
|
|
Common shares outstanding at
period end |
|
66,167 |
|
|
|
66,167 |
|
|
|
66,037 |
|
|
|
66,167 |
|
|
|
66,037 |
|
|
______________(1) Results of Torgau included
from the date of acquisition on September 30, 2022.(2) Redemption
of 6.50% senior notes due 2024 and 7.375% senior notes due
2025.
Summary Operating
Highlights
|
Q4 |
|
|
Q3 |
|
|
Q4 |
|
|
YTD |
|
|
YTD |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
(1) |
2021 |
|
|
Pulp
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp production ('000
ADMTs) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
390.9 |
|
|
|
362.9 |
|
|
|
476.2 |
|
|
|
1,607.6 |
|
|
|
1,671.2 |
|
|
NBHK |
|
80.6 |
|
|
|
82.1 |
|
|
|
48.8 |
|
|
|
271.0 |
|
|
|
192.7 |
|
|
Annual maintenance downtime
('000 ADMTs) |
|
39.5 |
|
|
|
17.3 |
|
|
|
- |
|
|
|
111.0 |
|
|
|
253.7 |
|
|
Annual maintenance downtime
(days) |
|
21 |
|
|
|
17 |
|
|
|
- |
|
|
|
80 |
|
|
|
188 |
|
|
Pulp sales ('000 ADMTs) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
393.4 |
|
|
|
356.6 |
|
|
|
465.6 |
|
|
|
1,660.8 |
|
|
|
1,616.9 |
|
|
NBHK |
|
72.0 |
|
|
|
69.3 |
|
|
|
50.7 |
|
|
|
257.0 |
|
|
|
195.8 |
|
|
Average NBSK pulp prices
($/ADMT)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
1,442 |
|
|
|
1,500 |
|
|
|
1,302 |
|
|
|
1,427 |
|
|
|
1,243 |
|
|
China |
|
920 |
|
|
|
969 |
|
|
|
723 |
|
|
|
949 |
|
|
|
850 |
|
|
North America |
|
1,745 |
|
|
|
1,800 |
|
|
|
1,472 |
|
|
|
1,704 |
|
|
|
1,478 |
|
|
Average NBHK pulp prices
($/ADMT)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China |
|
837 |
|
|
|
855 |
|
|
|
562 |
|
|
|
794 |
|
|
|
661 |
|
|
North America |
|
1,608 |
|
|
|
1,620 |
|
|
|
1,262 |
|
|
|
1,514 |
|
|
|
1,225 |
|
|
Average pulp sales
realizations ($/ADMT)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
913 |
|
|
|
911 |
|
|
|
784 |
|
|
|
876 |
|
|
|
779 |
|
|
NBHK |
|
896 |
|
|
|
990 |
|
|
|
649 |
|
|
|
869 |
|
|
|
615 |
|
|
Energy production ('000
MWh)(4) |
|
515.8 |
|
|
|
484.2 |
|
|
|
480.9 |
|
|
|
2,028.1 |
|
|
|
1,826.5 |
|
|
Energy sales ('000
MWh)(4) |
|
183.4 |
|
|
|
174.3 |
|
|
|
184.2 |
|
|
|
751.7 |
|
|
|
702.0 |
|
|
Average energy sales
realizations ($/MWh)(4) |
|
156 |
|
(5) |
|
339 |
|
|
|
184 |
|
|
|
214 |
|
(5) |
|
123 |
|
|
Solid Wood
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lumber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production (MMfbm) |
|
117.3 |
|
|
|
97.1 |
|
|
|
111.3 |
|
|
|
442.2 |
|
|
|
447.9 |
|
|
Sales (MMfbm) |
|
99.2 |
|
|
|
89.8 |
|
|
|
104.4 |
|
|
|
409.9 |
|
|
|
419.7 |
|
|
Average sales realizations ($/Mfbm) |
|
454 |
|
|
|
605 |
|
|
|
689 |
|
|
|
703 |
|
|
|
699 |
|
|
Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production and sales ('000 MWh) |
|
39.0 |
|
|
|
20.6 |
|
|
|
23.2 |
|
|
|
109.6 |
|
|
|
74.6 |
|
|
Average sales realizations ($/MWh) |
|
159 |
|
(5) |
|
394 |
|
|
|
213 |
|
|
|
224 |
|
(5) |
|
155 |
|
|
Manufactured products(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production ('000 cubic meters) |
|
8.3 |
|
|
|
15.0 |
|
|
|
6.1 |
|
|
|
36.3 |
|
|
|
6.1 |
|
|
Sales ('000 cubic meters) |
|
6.1 |
|
|
|
10.5 |
|
|
|
4.1 |
|
|
|
28.8 |
|
|
|
4.1 |
|
|
Average sales realizations ($/cubic meters) |
|
561 |
|
|
|
677 |
|
|
|
580 |
|
|
|
715 |
|
|
|
580 |
|
|
Pallets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production ('000 units) |
|
2,568.4 |
|
|
|
- |
|
|
|
- |
|
|
|
2,568.4 |
|
|
|
- |
|
|
Sales ('000 units) |
|
2,646.3 |
|
|
|
- |
|
|
|
- |
|
|
|
2,646.3 |
|
|
|
- |
|
|
Average sales realizations ($/unit) |
|
14 |
|
|
|
- |
|
|
|
- |
|
|
|
14 |
|
|
|
- |
|
|
Biofuels(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production ('000 tonnes) |
|
45.7 |
|
|
|
- |
|
|
|
- |
|
|
|
45.7 |
|
|
|
- |
|
|
Sales ('000 tonnes) |
|
49.8 |
|
|
|
- |
|
|
|
- |
|
|
|
49.8 |
|
|
|
- |
|
|
Average realizations ($/tonne) |
|
355 |
|
|
|
- |
|
|
|
- |
|
|
|
355 |
|
|
|
- |
|
|
Average Spot Currency
Exchange Rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ / €(8) |
|
1.0218 |
|
|
|
1.0066 |
|
|
|
1.1437 |
|
|
|
1.0534 |
|
|
|
1.1830 |
|
|
$ / C$(8) |
|
0.7366 |
|
|
|
0.7659 |
|
|
|
0.7936 |
|
|
|
0.7691 |
|
|
|
0.7981 |
|
|
______________(1) Results of Torgau included
from the date of acquisition on 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 Q4 2022 and YTD 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
finger joint lumber and cross-laminated timber.(7) Biofuels
includes briquettes and pellets.(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 EndedDecember
31, |
|
|
For the Year EndedDecember
31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
Revenues |
$ |
583,056 |
|
|
$ |
518,957 |
|
|
$ |
2,280,937 |
|
|
$ |
1,803,255 |
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales, excluding depreciation and amortization |
|
451,196 |
|
|
|
335,378 |
|
|
|
1,638,672 |
|
|
|
1,245,622 |
|
|
Cost of sales depreciation and amortization |
|
48,841 |
|
|
|
34,942 |
|
|
|
144,064 |
|
|
|
132,117 |
|
|
Selling, general and administrative expenses |
|
35,756 |
|
|
|
18,674 |
|
|
|
105,833 |
|
|
|
78,933 |
|
|
Operating income |
|
47,263 |
|
|
|
129,963 |
|
|
|
392,368 |
|
|
|
346,583 |
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(18,768 |
) |
|
|
(17,016 |
) |
|
|
(71,499 |
) |
|
|
(70,047 |
) |
|
Loss on early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(30,368 |
) |
|
Other income |
|
137 |
|
|
|
5,281 |
|
|
|
24,434 |
|
|
|
14,399 |
|
|
Total other expenses, net |
|
(18,631 |
) |
|
|
(11,735 |
) |
|
|
(47,065 |
) |
|
|
(86,016 |
) |
|
Income before income
taxes |
|
28,632 |
|
|
|
118,228 |
|
|
|
345,303 |
|
|
|
260,567 |
|
|
Income tax provision |
|
(8,608 |
) |
|
|
(43,706 |
) |
|
|
(98,264 |
) |
|
|
(89,579 |
) |
|
Net income |
$ |
20,024 |
|
|
$ |
74,522 |
|
|
$ |
247,039 |
|
|
$ |
170,988 |
|
|
Net income per common
share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.30 |
|
|
$ |
1.13 |
|
|
$ |
3.74 |
|
|
$ |
2.59 |
|
|
Diluted |
$ |
0.30 |
|
|
$ |
1.12 |
|
|
$ |
3.71 |
|
|
$ |
2.58 |
|
|
Dividends declared per common
share |
$ |
0.075 |
|
|
$ |
0.065 |
|
|
$ |
0.300 |
|
|
$ |
0.260 |
|
|
MERCER INTERNATIONAL
INC.CONSOLIDATED BALANCE
SHEETS(Unaudited)(In thousands,
except share and per share data)
|
|
December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
354,032 |
|
|
$ |
345,610 |
|
|
Accounts receivable, net |
|
|
351,993 |
|
|
|
345,345 |
|
|
Inventories |
|
|
450,470 |
|
|
|
356,731 |
|
|
Prepaid expenses and other |
|
|
21,680 |
|
|
|
16,619 |
|
|
Total current assets |
|
|
1,178,175 |
|
|
|
1,064,305 |
|
|
Property, plant and equipment, net |
|
|
1,341,322 |
|
|
|
1,135,631 |
|
|
Investment in joint ventures |
|
|
45,635 |
|
|
|
49,651 |
|
|
Amortizable intangible assets, net |
|
|
61,497 |
|
|
|
47,902 |
|
|
Goodwill |
|
|
30,937 |
|
|
|
— |
|
|
Operating lease right-of-use assets |
|
|
15,049 |
|
|
|
9,712 |
|
|
Pension asset |
|
|
4,397 |
|
|
|
4,136 |
|
|
Other long-term assets |
|
|
48,025 |
|
|
|
38,718 |
|
|
Deferred income tax |
|
|
— |
|
|
|
1,177 |
|
|
Total assets |
|
$ |
2,725,037 |
|
|
$ |
2,351,232 |
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Accounts payable and other |
|
$ |
377,306 |
|
|
$ |
282,307 |
|
|
Pension and other post-retirement benefit obligations |
|
|
755 |
|
|
|
817 |
|
|
Total current liabilities |
|
|
378,061 |
|
|
|
283,124 |
|
|
Long-term debt |
|
|
1,346,508 |
|
|
|
1,237,545 |
|
|
Pension and other post-retirement benefit obligations |
|
|
12,178 |
|
|
|
21,252 |
|
|
Operating lease liabilities |
|
|
9,475 |
|
|
|
6,574 |
|
|
Other long-term liabilities |
|
|
14,072 |
|
|
|
13,590 |
|
|
Deferred income tax |
|
|
125,959 |
|
|
|
95,123 |
|
|
Total liabilities |
|
|
1,886,253 |
|
|
|
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 |
|
|
354,495 |
|
|
|
347,902 |
|
|
Retained earnings |
|
|
598,119 |
|
|
|
370,927 |
|
|
Accumulated other comprehensive loss |
|
|
(179,962 |
) |
|
|
(90,793 |
) |
|
Total shareholders’
equity |
|
|
838,784 |
|
|
|
694,024 |
|
|
Total liabilities and
shareholders’ equity |
|
$ |
2,725,037 |
|
|
$ |
2,351,232 |
|
|
MERCER INTERNATIONAL
INC.CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)(In
thousands)
|
|
For the Year Ended December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
Cash flows from (used in)
operating activities |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
247,039 |
|
|
$ |
170,988 |
|
|
$ |
(17,235 |
) |
|
Adjustments to reconcile net income (loss) to cash flows from
operating activities |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
144,153 |
|
|
|
132,199 |
|
|
|
128,921 |
|
|
Deferred income tax provision (recovery) |
|
|
7,003 |
|
|
|
18,791 |
|
|
|
(15,249 |
) |
|
Inventory impairment |
|
|
— |
|
|
|
— |
|
|
|
25,998 |
|
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
30,368 |
|
|
|
— |
|
|
Defined benefit pension plans and other post-retirement benefit
plan expense |
|
|
1,708 |
|
|
|
2,831 |
|
|
|
3,053 |
|
|
Stock compensation expense |
|
|
6,737 |
|
|
|
2,394 |
|
|
|
928 |
|
|
Gain on sale of investments |
|
|
(519 |
) |
|
|
— |
|
|
|
(17,540 |
) |
|
Foreign exchange transaction losses (gains) |
|
|
(16,802 |
) |
|
|
(16,597 |
) |
|
|
13,272 |
|
|
Other |
|
|
(722 |
) |
|
|
384 |
|
|
|
543 |
|
|
Defined benefit pension plans and other post-retirement benefit
plan contributions |
|
|
(2,942 |
) |
|
|
(4,258 |
) |
|
|
(4,164 |
) |
|
Changes in working capital |
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(20,476 |
) |
|
|
(121,579 |
) |
|
|
(6,269 |
) |
|
Inventories |
|
|
(63,184 |
) |
|
|
(96,442 |
) |
|
|
(11,430 |
) |
|
Accounts payable and accrued expenses |
|
|
66,796 |
|
|
|
75,589 |
|
|
|
(53,744 |
) |
|
Other |
|
|
(8,131 |
) |
|
|
(12,454 |
) |
|
|
(5,519 |
) |
|
Net cash from (used in) operating activities |
|
|
360,660 |
|
|
|
182,214 |
|
|
|
41,565 |
|
|
Cash flows from (used in)
investing activities |
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(178,742 |
) |
|
|
(159,440 |
) |
|
|
(78,518 |
) |
|
Acquisitions, net of cash acquired |
|
|
(256,604 |
) |
|
|
(51,258 |
) |
|
|
— |
|
|
Property insurance proceeds |
|
|
8,616 |
|
|
|
21,540 |
|
|
|
— |
|
|
Purchase of amortizable intangible assets |
|
|
(495 |
) |
|
|
(1,385 |
) |
|
|
(647 |
) |
|
Purchase of investments |
|
|
(75,000 |
) |
|
|
— |
|
|
|
(9,370 |
) |
|
Proceeds from sale of investments |
|
|
75,519 |
|
|
|
— |
|
|
|
26,910 |
|
|
Other |
|
|
1,029 |
|
|
|
3,416 |
|
|
|
1,798 |
|
|
Net cash from (used in) investing activities |
|
|
(425,677 |
) |
|
|
(187,127 |
) |
|
|
(59,827 |
) |
|
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 |
|
|
115,330 |
|
|
|
(33,396 |
) |
|
|
52,651 |
|
|
Dividend payments |
|
|
(19,847 |
) |
|
|
(17,167 |
) |
|
|
(21,892 |
) |
|
Payment of debt issuance costs |
|
|
(3,871 |
) |
|
|
(14,483 |
) |
|
|
— |
|
|
Proceeds from government grants |
|
|
1,067 |
|
|
|
9,333 |
|
|
|
362 |
|
|
Payment of finance lease obligations |
|
|
(10,003 |
) |
|
|
(7,850 |
) |
|
|
(4,636 |
) |
|
Other |
|
|
(711 |
) |
|
|
3,616 |
|
|
|
(168 |
) |
|
Net cash from (used in) financing activities |
|
|
81,965 |
|
|
|
(9,504 |
) |
|
|
26,317 |
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
|
(8,526 |
) |
|
|
(1,071 |
) |
|
|
1,958 |
|
|
Net increase (decrease) in
cash and cash equivalents |
|
|
8,422 |
|
|
|
(15,488 |
) |
|
|
10,013 |
|
|
Cash and cash equivalents,
beginning of year |
|
|
345,610 |
|
|
|
361,098 |
|
|
|
351,085 |
|
|
Cash and cash equivalents, end
of year |
|
$ |
354,032 |
|
|
$ |
345,610 |
|
|
$ |
361,098 |
|
|
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:
|
Q4 |
|
|
Q3 |
|
|
Q4 |
|
|
YTD |
|
|
YTD |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
(1) |
2021 |
|
|
Net income |
$ |
20,024 |
|
|
$ |
66,746 |
|
|
$ |
74,522 |
|
|
$ |
247,039 |
|
|
$ |
170,988 |
|
|
Income tax provision |
|
8,608 |
|
|
|
31,294 |
|
|
|
43,706 |
|
|
|
98,264 |
|
|
|
89,579 |
|
|
Interest expense |
|
18,768 |
|
|
|
17,935 |
|
|
|
17,016 |
|
|
|
71,499 |
|
|
|
70,047 |
|
|
Loss on early extinguishment
of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,368 |
|
|
Other income |
|
(137 |
) |
|
|
(7,252 |
) |
|
|
(5,281 |
) |
|
|
(24,434 |
) |
|
|
(14,399 |
) |
|
Operating income |
|
47,263 |
|
|
|
108,723 |
|
|
|
129,963 |
|
|
|
392,368 |
|
|
|
346,583 |
|
|
Add: Depreciation and
amortization |
|
48,865 |
|
|
|
32,144 |
|
|
|
34,962 |
|
|
|
144,153 |
|
|
|
132,199 |
|
|
Operating EBITDA |
$ |
96,128 |
|
|
$ |
140,867 |
|
|
$ |
164,925 |
|
|
$ |
536,521 |
|
|
$ |
478,782 |
|
|
______________(1) Results of Torgau included
from the date of acquisition on September 30, 2022.
Mercer (NASDAQ:MERC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Mercer (NASDAQ:MERC)
Historical Stock Chart
From Jul 2023 to Jul 2024