Mercer International Inc. Reports Fourth Quarter 2024 and Year End 2024 Results

Fourth quarter Operating EBITDA* increased to $99.2 million (net income of $16.7 million) from $50.5 million (net loss of $17.6 million) in the third quarter of 2024

Full year 2024 Operating EBITDA increased to $243.7 million (net loss of $85.1 million) from $17.5 million (net loss of $242.1 million) in 2023

Refinanced our former 2026 Senior Notes, extending the maturity of our earliest senior notes to 2028, and decreased our long-term debt by over $100.0 million using cash on hand

Quarterly cash dividend of $0.075 per share

Mercer International Inc. reported fourth quarter 2024 Operating EBITDA of $99.2 million, an increase from $21.1 million in the same quarter of 2023 and $50.5 million in the third quarter of 2024.

In the fourth quarter of 2024, net income was $16.7 million ($0.25 per share) compared to a net loss of $87.2 million (negative $1.31 per share) in the fourth quarter of 2023 and a net loss of $17.6 million (negative $0.26 per share) in the third quarter of 2024.

Mr. Juan Carlos Bueno, Chief Executive Officer, stated: “With strengthened pulp markets, our operating results for the year improved significantly. In the fourth quarter of 2024, softwood pulp prices remained strong, decreasing slightly from recent record prices. Our operating results in the quarter benefited from a stronger dollar and no planned maintenance downtime. As we move into the first quarter of 2025, we currently expect modestly higher softwood pulp sales realizations due to stable demand and continued global softwood supply constraints.

Hardwood pulp prices in China and North America decreased in the fourth quarter of 2024 as the market absorbed capacity increases from earlier in the year. However, we currently believe hardwood pulp prices are near floor levels and are trending upwards in the first quarter of 2025 as the maintenance season begins in Latin America.

Lumber sales realizations increased in the fourth quarter of 2024 compared to the third quarter driven by modestly higher prices in the U.S. market, while in Europe, prices remained stable. In the first quarter of 2025, we currently expect lumber prices to modestly increase driven by stronger demand from certain European countries where economic conditions have improved and expect U.S. lumber prices to increase slightly due to limited North American supply.

Demand and pricing for our products may be further impacted by ongoing developments regarding U.S. trade policies involving Canada, the European Union and China. Our businesses have a relatively strong level of geographic and market diversification. As such, we expect the impacts of any tariffs and related measures to vary, including potentially presenting opportunities and some positive impacts, in areas of our operations.

Overall, per unit fiber costs for our pulp segment were flat in the fourth quarter of 2024 compared to the third quarter of 2024. Per unit fiber costs for our solid wood segment increased due to stable demand and tight supply. In the first quarter of 2025, we currently expect per unit fiber costs to be generally stable at our pulp mills. For our sawmills, we currently expect per unit fiber costs to increase due to continued tight supply.

We are currently planning for a total of 21 days of planned maintenance downtime at our Celgar mill in the first quarter of 2025.

In our solid wood segment, our mass timber business successfully completed two large-scale projects in the U.S. The current high-interest rate environment in Europe and North America continues to have an impact on our solid wood segment, putting downward pressure on both short-term growth and demand for this segment’s products. However, we continue to believe that we are well positioned to capitalize on more opportunities as cyclical conditions start to improve.”

Mr. Bueno concluded: “Our operating results this year improved significantly compared to the prior year, driven by stronger pulp markets, lower costs and the growth of our mass timber business. We finished 2024 with approximately $488.6 million in aggregate liquidity and reduced our long-term debt by over $100 million in the fourth quarter using cash on hand. This focus on debt reduction will remain a key goal as we move forward in this improved market environment.”

Consolidated – Three Months Ended December 31, 2024 Compared to Three Months Ended December 31, 2023

Total revenues for the fourth quarter of 2024 increased by approximately 4% to $488.4 million from $470.5 million in the same quarter of 2023 primarily due to higher pulp sales realizations partially offset by lower pulp sales volumes.

Costs and expenses in the fourth quarter of 2024 decreased by approximately 17% to $438.0 million from $526.9 million in the same quarter of 2023 driven by lower pulp sales volumes, foreign exchange gains mainly on dollar denominated accounts receivables held at our operations as the dollar strengthened relative to the euro and Canadian dollar at the end of 2024 and lower maintenance costs due to no days of planned maintenance downtime at our pulp mills in the fourth quarter of 2024 compared to 23 days in the fourth quarter of 2023. In the fourth quarter of 2023, we recognized a $33.7 million non-cash impairment in connection with the classification of our sandalwood business as held for sale.

In the fourth quarter of 2024, Operating EBITDA increased to $99.2 million from $21.1 million in the same quarter of 2023 primarily due to higher pulp sales realizations, the positive impact of a stronger dollar and no planned days of maintenance downtime at our pulp mills in the fourth quarter of 2024.

Segment Results

Pulp

In the fourth quarter of 2024, Segment Operating EBITDA increased to $106.1 million from $32.0 million in the same quarter of 2023 primarily due to higher pulp sales realizations, foreign exchange gains mainly on dollar denominated accounts receivables held at our operations as the dollar strengthened relative to the euro and Canadian dollar at the end of 2024 and no days of planned maintenance downtime at our pulp mills in the fourth quarter of 2024 compared to 23 days in the fourth quarter of 2023.

Pulp segment revenues, comprised of pulp, energy and chemical revenues, in the fourth quarter of 2024 increased by approximately 3% to $375.5 million from $364.2 million in the same quarter of 2023 primarily due to higher pulp revenues.

Pulp revenues in the fourth quarter of 2024 modestly increased to $351.2 million from $340.7 million in the same quarter of 2023 as a result of higher sales realizations partially offset by lower sales volumes.

In the fourth quarter of 2024, third-party industry quoted average list prices for NBSK pulp increased in both Europe and North America from the same quarter of 2023. Third-party industry quoted average net prices for NBSK pulp in China also increased from the same quarter of 2023. Our average NBSK pulp sales realizations in the fourth quarter of 2024 increased by approximately 12% to $794 per ADMT from $709 per ADMT in the same quarter of 2023. In the fourth quarter of 2024, average NBHK pulp sales realizations modestly decreased to $578 per ADMT from $593 per ADMT in the same quarter of 2023.

Total pulp sales volumes in the fourth quarter of 2024 decreased by approximately 8% to 451,914 ADMTs from 491,156 ADMTs in the same quarter of 2023 primarily due to lower production.

Energy and chemical revenues in the fourth quarter of 2024 were relatively flat at $24.3 million compared to $23.5 million in the same quarter of 2023.

Costs and expenses in the fourth quarter of 2024 decreased by approximately 16% to $306.9 million from $363.2 million in the same quarter of 2023 primarily due to lower pulp sales volumes, the positive foreign exchange impact of a stronger dollar and lower maintenance costs due to no days of planned downtime at our pulp mills in the fourth quarter of 2024 compared to 23 days in the fourth quarter of 2023.

Total pulp production in the fourth quarter of 2024 decreased by approximately 8% to 466,635 ADMTs compared with 507,670 ADMTs in the same quarter of 2023 primarily as a result of the dissolution of the Cariboo Pulp & Paper Company (“CPP”) joint venture in the first quarter of 2024 and unplanned downtime at our Canadian mills partially offset by fewer days of planned maintenance downtime.

On average, in the fourth quarter of 2024, overall per unit fiber costs decreased by approximately 5% compared to the same quarter of 2023 due to stable supply at all our mills. In the first quarter of 2025, we currently expect per unit fiber costs to increase in Germany due to tight supply offset by modestly lower per unit fiber costs in Canada.

Solid Wood

In the fourth quarter of 2024, Segment Operating EBITDA was relatively flat at negative $4.7 million compared to negative $5.6 million in the same quarter of 2023.

Solid wood segment revenues in the fourth quarter of 2024 increased by approximately 6% to $111.6 million from $105.4 million in the same quarter of 2023 primarily due to higher lumber and biofuels revenues partially offset by lower revenues from our other products.

Lumber revenues in the fourth quarter of 2024 increased by approximately 23% to $58.6 million from $47.8 million in the same quarter of 2023 primarily as a result of higher sales realizations and sales volumes. Average lumber sales realizations in the fourth quarter of 2024 increased to $474 per Mfbm from $427 per Mfbm in the same quarter of 2023 driven by an increase in demand in both the U.S and European markets. The U.S. market accounted for approximately 45% of our lumber revenues and approximately 38% of our lumber sales volumes in the fourth quarter of 2024. Most of the balance of our lumber sales were in Europe.

Lumber sales volumes in the fourth quarter of 2024 increased by approximately 10% to 123.6 MMfbm from 112.0 MMfbm in the same quarter of 2023 due to timing of sales.

Manufactured products revenues in the fourth quarter of 2024 decreased by approximately 22% to $12.7 million from $16.3 million in the same quarter of 2023 primarily due to lower sales volumes as we completed our major mass timber projects in the third quarter of 2024.

Lumber production in the fourth quarter of 2024 was relatively stable at 114.7 MMfbm compared to 111.6 MMfbm in the same quarter of 2023.

Fiber costs were approximately 75% of our lumber cash production costs in the fourth quarter of 2024. In the fourth quarter of 2024, per unit fiber costs for lumber increased by approximately 18% compared to the same quarter of 2023 primarily due to stable demand and tight supply. In the first quarter of 2025, we currently expect per unit fiber costs to increase due to continued tight supply.

Consolidated – Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Total revenues in 2024 modestly increased to $2,043.4 million from $1,993.8 million in 2023 as higher pulp, manufactured products and lumber sales realizations were offset by lower sales realizations from our other products and lower pulp and lumber sales volumes.

Costs and expenses in 2024 decreased by approximately 7% to $2,028.4 million from $2,182.6 million in 2023 primarily as a result of lower per unit production costs due to the easing of inflationary pressure and cost reduction initiatives, lower sales volumes and foreign exchange gains mainly on dollar denominated accounts receivables held at our operations as the dollar strengthened relative to the euro and Canadian dollar at the end of 2024. In 2024, costs and expenses included a non-cash loss of $23.6 million recognized in connection with the dissolution of the CPP joint venture and a non-cash goodwill impairment of $34.3 million related to the Torgau facility, which was recognized as a result of ongoing weakness in lumber, pallet and biofuels markets in Europe stemming from high interest rates and other economic conditions. We have achieved some of the planned synergies from the Torgau acquisition and expect to achieve further synergies as market and economic conditions improve. In 2023, we received insurance proceeds of $46.4 million relating to the 2021 turbine downtime at the Rosenthal mill and the 2022 fire at the Stendal mill and we recognized a $33.7 million non-cash impairment in connection with the classification of our sandalwood business as held for sale.

In 2024, Operating EBITDA increased to $243.7 million from $17.5 million in 2023 primarily due to higher pulp, manufactured products and lumber sales realizations, lower per unit fiber and other production costs and the positive foreign exchange impact of a stronger dollar. These increases were partially offset by lower sales realizations from our other products. In 2023, we received insurance proceeds of $46.4 million relating to the 2021 turbine downtime at the Rosenthal mill and the 2022 fire at the Stendal mill.

Liquidity

As of December 31, 2024, we had cash and cash equivalents of $184.9 million, approximately $303.7 million available under our revolving credit facilities and aggregate liquidity of about $488.6 million.

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About Mercer International

Mercer International Inc. is a global forest products company with operations in Germany, USA and Canada with consolidated annual production capacity of 2.1 million tonnes of pulp, 960 million board feet of lumber, 210 thousand cubic meters of CLT, 45 thousand cubic meters of glulam, 17 million pallets and 230,000 metric tonnes of biofuels. To obtain further information on the company, please visit its website at https://www.mercerint.com.

Contact:

William D. McCartney – Chairman – (604) 684-1099

Source: Mercer International Inc.