Core Insights - Mercer International reported a wider net loss and a year-over-year decline in both earnings and revenue for Q2 2025, with GAAP EPS at $(1.29) and revenue at $453.5 million, below estimates of $476.7 million [1][2] - The company suspended its regular dividend to preserve cash amid worsening profitability and uncertain market recovery [1][9] Financial Performance - Q2 2025 GAAP EPS was $(1.29), a decline of 27.7% from Q2 2024's $(0.96) [2] - Revenue for Q2 2025 was $453.5 million, down 9.2% from $499.4 million in Q2 2024 [2] - Operating EBITDA turned negative at $(20.9) million, a significant drop from a gain of $30.4 million in the previous year, indicating serious cost and pricing pressures [2][5] Segment Performance - Pulp segment revenue fell approximately 10% year-over-year to $332.3 million, with NBSK pulp prices declining 7% to $758 per air-dry metric ton [2][6] - Solid Wood segment revenue decreased by 10%, with a notable 65% drop in revenue from mass timber products due to reduced project activity [2][7] Strategic Focus - The company focuses on producing Northern Bleached Softwood Kraft (NBSK) pulp and solid wood products, with a strategy centered on cost-efficient manufacturing and sustainability [3][4] - Mercer holds a monopoly as Germany's only NBSK producer and is investing in products linked to global carbon-reduction trends [4] Challenges and Outlook - The company faces challenges from currency movements, high input costs, and weak demand in key markets, particularly China [8][12] - Management did not provide formal financial guidance but indicated that softwood pulp prices are likely to decrease, while lumber prices may rise [11]

Financial Performance - The company's EBITDA for Q2 2025 was negative $21 million, a significant decrease from Q1's positive EBITDA of $47 million [5]. Management Commentary - Richard Short, the CFO, provided an overview of the financial and operational highlights for the second quarter before handing over to CEO Juan Carlos Bueno for further insights into markets, operations, and strategic initiatives [3].

Financial Data and Key Metrics Changes - The company reported a negative EBITDA of $21 million for Q2 2025, a significant decrease from the positive EBITDA of $47 million in Q1 2025, primarily due to foreign exchange impacts and lower pulp prices in China [3][11][20] - The consolidated net loss for Q2 was $86 million, or $1.29 per share, compared to a net loss of $22 million, or $0.33 per share in Q1 [11] - Cash consumption increased to $35 million in Q2 from $3 million in Q1, driven by lower EBITDA [11] Business Line Data and Key Metrics Changes - The pulp segment had a negative EBITDA of $10 million in Q2, while the solid wood segment reported a negative EBITDA of $5 million [3][26] - NBSK pulp sales realizations decreased in Q2, with the net price in China dropping to $734 per tonne, a decrease of $59 from Q1 [4] - Lumber production decreased by 6% to approximately 120 million board feet in Q2 due to planned maintenance [9] Market Data and Key Metrics Changes - In North America, the average list price for MBSK increased by $67 to $18.20 per tonne, while the European price remained stable at $15.53 per tonne [4] - The average price for NBHK in China decreased by $45 to $533 per tonne [5] - Pulp sales volumes decreased by 51,000 tons to 427,000 tons in Q2 due to weaker demand [5][6] Company Strategy and Development Direction - The company launched the "One Goal 100" program aimed at achieving $100 million in cost savings and operational efficiencies by 2026 [10][14] - The company plans to reduce capital expenditures to about $100 million in 2025, focusing on maintenance and safety projects [34] - The company is exploring a carbon capture project at the Peace River Mill, which could generate significant revenue from CO2 credits [35][70] Management's Comments on Operating Environment and Future Outlook - Management highlighted that trade uncertainty and tariffs have negatively impacted Q2 results, particularly affecting demand from China [13][19] - The company expects pulp prices to remain weak through the summer but anticipates a recovery in Q4 as demand picks up [22][66] - Management remains optimistic about the long-term value of pulp and the growth potential of mass timber products [36][33] Other Important Information - The company suspended its dividend as a prudent measure to focus on debt reduction amid market uncertainties [19] - The company reported a strong liquidity position of $438 million at the end of Q2, including $146 million in cash [12] Q&A Session Summary Question: Can you provide information on cash flow items for 2025? - The company expects cash taxes for the year to be about $25 million, with a slight negative working capital change anticipated [39][44] Question: What is the minimum liquidity level the company is comfortable with? - The company is not concerned about liquidity and has room to adjust capital expenditures if needed [51][54] Question: Can you comment on softwood inventory levels and potential write-downs? - The company does not foresee any impairments on softwood inventories, although levels are slightly elevated [58] Question: What could catalyze pulp prices gaining momentum later in the year? - The company expects restocking demand after the low summer season to drive pulp prices up, particularly for softwood [66] Question: How significant is the carbon capture project at Peace River? - The project could generate over $100 million per year in revenue from CO2 credits, with a capital requirement of around $100 million for the company's share [70][74] Question: How is the Torgau mill positioned for the U.S. market? - The Torgau mill is equipped to supply the U.S. market and is expected to increase production capacity [78][80]

Financial Data and Key Metrics Changes - The company reported a negative EBITDA of $21 million for Q2 2025, a significant decrease from the positive EBITDA of $47 million in Q1 2025, primarily due to negative foreign exchange impacts and lower pulp prices in China [3][10][19] - The consolidated net loss for Q2 was $86 million, or $1.29 per share, compared to a net loss of $22 million, or $0.33 per share in Q1 [10] - Cash consumption increased to $35 million in Q2 from $3 million in Q1, driven by lower EBITDA [10][11] Business Line Data and Key Metrics Changes - The pulp segment experienced a negative EBITDA of $10 million in Q2, while the solid wood segment had a negative EBITDA of $5 million [3][25] - NBSK pulp sales realizations decreased in Q2 due to a weaker global trade environment, with the average net price in China dropping to $734 per tonne, a decrease of $59 from Q1 [4] - Lumber production decreased to approximately 120 million board feet, down 6% from Q1, and lumber sales volumes also decreased by about 8% [8][25] Market Data and Key Metrics Changes - In North America, the average list price for MBSK increased to $18.20 per tonne, up $67 from Q1, while the European price remained stable at $15.53 per tonne [4] - The average price for NBHK in China decreased to $533 per tonne, down $45 from Q1, while the North American average increased to $13.10 per tonne, up $42 from Q1 [5] - The company noted a significant decrease in pulp sales volumes, down by 51,000 tons to 427,000 tons due to weaker demand [5][6] Company Strategy and Development Direction - The company launched the "One Goal 100" program aimed at achieving $100 million in cost savings and operational efficiencies by 2026, with $5 million in savings already realized [9][15] - The company plans to reduce capital expenditures to about $100 million in 2025, focusing on maintenance and safety projects [33] - The company is exploring a carbon capture project at its Peace River Mill, which could generate significant revenue from CO2 credits [34][66] Management's Comments on Operating Environment and Future Outlook - Management highlighted that trade uncertainty and tariffs were significant factors behind the disappointing Q2 results, with expectations for pulp prices to remain weak through the summer [13][21] - The company anticipates a gradual recovery in pulp prices towards the end of Q3 and into Q4, driven by restocking after the low summer season [60][62] - Management expressed confidence in the long-term value of pulp and the potential for growth in the mass timber business, despite current market challenges [36][32] Other Important Information - The company suspended its dividend as a prudent measure to focus on debt reduction amid market uncertainties [18] - The company reported a strong liquidity position of $438 million at the end of Q2, consisting of $146 million in cash and $292 million in undrawn revolvers [11] Q&A Session Summary Question: Can you provide information on cash flow items for 2025? - The company expects cash taxes for the year to be about $25 million, with capital expenditures targeted at $100 million [39][42] Question: What is the minimum liquidity level comfortable for the company? - The company indicated that it is not close to being uncomfortable with liquidity and has room to adjust capital expenditures if needed [48][51] Question: Can you comment on softwood inventory levels? - Management stated that softwood inventory levels are slightly elevated but not concerning, and there are no current impairments expected [55] Question: What could catalyze pulp prices gaining momentum later in the year? - Management believes that restocking after the low summer season and supply constraints will drive pulp prices up in Q4 [60][62] Question: What is the potential financial impact of the carbon capture project? - The project could generate significant revenue tied to CO2 credits, potentially exceeding $100 million per year, with a capital requirement of around $500 million, of which a substantial portion is expected to be covered by grants [66][68]

Financial Performance - Mercer's Operating EBITDA decreased significantly from $47 million in Q1 2025 to -$21 million in Q2 2025[6] - The pulp segment experienced a substantial decrease in EBITDA, from $50 million in Q1 2025 to -$10 million in Q2 2025[6] - The solid wood segment's EBITDA also decreased, from -$0 million in Q1 2025 to -$5 million in Q2 2025[6] - Net loss increased from -$22 million in Q1 2025 to -$86 million in Q2 2025[27] Pulp Market - NBSK (Northern Bleached Softwood Kraft) list price was $1,000 per tonne[10] - NBSK China (net) price decreased from $793 per tonne in Q1 2025 to $734 per tonne in Q2 2025[10] - NBHK (Northern Bleached Hardwood Kraft) China (net) price decreased from $578 per tonne in Q1 2025 to $533 per tonne in Q2 2025[10] Lumber and Mass Timber - Lumber production decreased by 6% from 128 mmfbm in Q1 2025 to 120 mmfbm in Q2 2025[43] - Mass timber revenue decreased from $17 million in Q1 2025 to $11 million in Q2 2025[25] Strategic Initiatives - Mercer aims to improve profitability by $100 million by the end of 2026, using 2024 as a baseline[30] - The company realized $5 million in cost savings to date and anticipates $25 million for 2025[30]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Second Quarter 2025 Selected Highlights](index=1&type=section&id=Second%20Quarter%202025%20Selected%20Highlights) Mercer International Inc. reported a significant decline in financial performance for Q2 2025, with Operating EBITDA turning negative and net loss increasing compared to both the previous quarter and the same quarter last year Selected Financial Highlights | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----- | :------ | :------ | :------ | | Operating EBITDA | -$20.9 million | $47.1 million | $30.4 million | | Net Loss | -$86.1 million | -$22.3 million | -$67.6 million | | Net Loss per Share | -$1.29 | -$0.33 | -$1.01 | [CEO Commentary & Strategic Initiatives](index=1&type=section&id=CEO%20Commentary%20%26%20Strategic%20Initiatives) CEO Juan Carlos Bueno attributed the weak Q2 2025 results to global trade uncertainties, weaker pulp demand in China, and a negative impact from the depreciating dollar. The company also recognized an $11 million non-cash impairment on hardwood inventory and is progressing its "One Goal One Hundred" cost-saving program, while prudently pausing quarterly dividends due to market uncertainty - Operating results for Q2 2025 reflect impacts of ongoing uncertainties in the global trade environment and a weaker dollar, contributing to **weaker pulp demand in China**[3](index=3&type=chunk) - Depreciation of the dollar relative to the euro and Canadian dollar had a **negative impact of approximately $26 million on Operating EBITDA** for Q2 2025 compared to Q1 2025[3](index=3&type=chunk) - An **$11 million non-cash impairment** was recognized on hardwood inventory at the Peace River mill due to lower hardwood prices in China[3](index=3&type=chunk) - Progressing "One Goal One Hundred" program targeting **$100 million in profitability improvement actions by the end of 2026** (using 2024 as a baseline), with approximately **$5 million realized to date** and **$25 million anticipated by the end of 2025**[4](index=4&type=chunk)[6](index=6&type=chunk) - **Quarterly dividend paused** to prudently allocate capital amidst ongoing market uncertainty, with a long-term commitment to a competitive dividend as uncertainties are resolved[4](index=4&type=chunk)[11](index=11&type=chunk) [Market Outlook & Operational Updates](index=2&type=section&id=Market%20Outlook%20%26%20Operational%20Updates) The company anticipates a decrease in softwood pulp prices in Q3 2025 across key markets, while hardwood pulp prices are expected to remain relatively steady. Lumber prices are projected to increase in both the U.S. and Europe. Per unit fiber costs are expected to be lower for German pulp mills but marginally higher for German solid wood operations. Pulp mills experienced 29 days of downtime in Q2 2025, with 18 days planned for Q3 2025 - Anticipate a **decrease in softwood pulp prices** across key markets in Q3 2025 amidst the current economic environment and seasonality. Hardwood pulp prices are expected to be **relatively steady**[7](index=7&type=chunk) - Expect lumber prices to **increase in the U.S. in Q3 2025** due to duties imposed on Canadian lumber imports and reduced supply, and **modestly increase in Europe** due to strong demand and higher fiber costs[8](index=8&type=chunk) - Per unit fiber costs for German pulp mills are expected to be **lower in Q3 2025** due to reduced demand, while Canadian pulp mills' costs are expected to be **relatively stable**. German solid wood operations anticipate a **marginal increase** due to a temporary reduction in regional logging and continued strong demand[9](index=9&type=chunk)[25](index=25&type=chunk)[34](index=34&type=chunk) - Pulp mills had **29 days of downtime** (approximately **40,900 ADMTs**) in Q2 2025, including 23 days of planned annual maintenance. A total of **18 days of planned annual maintenance downtime is expected in Q3 2025**[10](index=10&type=chunk)[24](index=24&type=chunk) - Solid wood segment results continue to be **negatively impacted by high interest rates** in Europe, but moderate growth is beginning. The mass timber business maintains a healthy order book with a **significant increase in 'win rate'** on new project bids, expected to **positively impact results in 2026**[11](index=11&type=chunk) [Consolidated Financial Performance](index=3&type=section&id=Consolidated%20Financial%20Performance) [Three Months Ended June 30, 2025 Compared to 2024](index=3&type=section&id=Three%20Months%20Ended%20June%2030,%202025%20Compared%20to%202024) Total revenues decreased by 9% in Q2 2025 compared to Q2 2024, primarily due to lower pulp and manufactured products sales. Costs and expenses also decreased, but Operating EBITDA significantly declined to negative $20.9 million from positive $30.4 million, driven by lower sales realizations, negative foreign exchange impacts, higher fiber costs, and an inventory impairment Consolidated Financial Performance (Q2 2025 vs Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Total Revenues | $453.5 million | $499.4 million | -9.2% | | Costs and Expenses | $511.9 million | $543.2 million | -5.8% | | Operating EBITDA | -$20.9 million | $30.4 million | N/A (negative swing) | | Net Loss | -$86.1 million | -$67.6 million | +27.4% | - The **decrease in costs and expenses** was driven by **fewer days of planned annual maintenance downtime**, partially offset by foreign exchange losses, **higher per unit fiber costs**, and an **$11.0 million non-cash impairment** recognized against hardwood inventory[14](index=14&type=chunk)[15](index=15&type=chunk) - In Q2 2024, costs and expenses included a **non-cash goodwill impairment of $34.3 million** related to the Torgau facility[15](index=15&type=chunk) [Six Months Ended June 30, 2025 Compared to 2024](index=7&type=section&id=Six%20Months%20Ended%20June%2030,%202025%20Compared%20to%202024) For the first half of 2025, total revenues decreased by approximately 9%, and Operating EBITDA significantly declined to $26.2 million from $94.0 million in the same period of 2024, primarily due to higher fiber costs, lower pulp and manufactured product sales realizations, negative foreign exchange impacts, and the hardwood inventory impairment Consolidated Financial Performance (YTD 2025 vs YTD 2024, in millions) | Metric | YTD 2025 | YTD 2024 | Change (%) | | :----- | :------- | :------- | :--------- | | Total Revenues | $960.5 million | $1,052.8 million | -8.8% | | Costs and Expenses | $1,012.2 million | $1,097.0 million | -7.8% | | Operating EBITDA | $26.2 million | $94.0 million | -72.1% | | Net Loss | -$108.4 million | -$84.3 million | +28.6% | - **Costs and expenses in the first half of 2025 decreased primarily due to lower pulp sales volumes**, partially offset by **higher per unit fiber costs**, foreign exchange losses, and the **non-cash impairment recognized against hardwood inventory**[36](index=36&type=chunk) - In the first half of 2024, costs and expenses included a **non-cash goodwill impairment of $34.3 million** and a **non-cash loss of $23.6 million** from the dissolution of the Cariboo Pulp & Paper Company mill joint venture[36](index=36&type=chunk) [Segment Results](index=4&type=section&id=Segment%20Results) [Pulp Segment](index=4&type=section&id=Pulp%20Segment) The pulp segment's Operating EBITDA turned negative in Q2 2025, decreasing to -$10.3 million from $31.7 million in Q2 2024. This was mainly due to lower pulp sales realizations, negative foreign exchange impacts, hardwood inventory impairment, and higher fiber costs, partially offset by lower maintenance costs. Total pulp revenues decreased by 10%, driven by lower sales realizations and volumes, despite an 8% increase in total pulp production Pulp Segment Financials (Q2 2025 vs Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Segment Operating EBITDA | -$10.3 million | $31.7 million | N/A (negative swing) | | Pulp Revenues | $313.7 million | $346.8 million | -9.5% | | Energy and Chemical Revenues | $18.6 million | $20.6 million | -9.7% | | Total Pulp Segment Revenues | $332.3 million | $367.4 million | -9.6% | Pulp Average Sales Realization ($/ADMT) | Pulp Type | Q2 2025 Avg. Sales Realization ($/ADMT) | Q2 2024 Avg. Sales Realization ($/ADMT) | Change (%) | | :-------- | :------------------------------------- | :------------------------------------- | :--------- | | NBSK | $758 | $811 | -6.6% | | NBHK | $575 | $701 | -18.0% | - Total pulp sales volumes were **relatively flat at 426,731 ADMTs** in Q2 2025 compared to 433,320 ADMTs in Q2 2024[22](index=22&type=chunk) - Total pulp production **increased by approximately 8% to 457,117 ADMTs** in Q2 2025 (vs. 421,692 ADMTs in Q2 2024) primarily due to **fewer days of planned annual maintenance downtime (29 days in Q2 2025 vs. 44 days in Q2 2024)**[24](index=24&type=chunk) - Overall average per unit fiber costs in Q2 2025 **increased by approximately 11%** compared to Q2 2024, primarily due to **higher per unit fiber costs at German mills from reduced supply**[25](index=25&type=chunk) [Solid Wood Segment](index=6&type=section&id=Solid%20Wood%20Segment) The solid wood segment's Operating EBITDA also turned negative in Q2 2025, decreasing to -$4.9 million from $3.1 million in Q2 2024, mainly due to lower manufactured products sales realizations and higher fiber costs, partially offset by higher lumber sales realizations. Total solid wood revenues decreased by 10%, despite a 23% increase in lumber revenues driven by higher sales realizations. Manufactured products revenues saw a significant 65% decrease Solid Wood Segment Financials (Q2 2025 vs Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Segment Operating EBITDA | -$4.9 million | $3.1 million | N/A (negative swing) | | Solid Wood Segment Revenues | $117.3 million | $130.2 million | -10.0% | | Lumber Revenues | $66.3 million | $53.9 million | +23.0% | | Manufactured Products Revenues | $12.4 million | $35.4 million | -65.0% | - Average lumber sales realizations **increased by approximately 19% to $550 per Mfbm** in Q2 2025 (vs. $463 per Mfbm in Q2 2024) due to lower supply and improved demand in both the U.S. and European markets[30](index=30&type=chunk) - Manufactured products sales realizations **decreased to $1,318 per cubic meter** in Q2 2025 from $2,942 per cubic meter in Q2 2024, **impacted by the ongoing elevated interest rate environment in the U.S.**[32](index=32&type=chunk) - Lumber production **increased by approximately 8% to 120.2 MMfbm** in Q2 2025 (vs. 111.4 MMfbm in Q2 2024) driven by the timing of planned maintenance downtime and higher production at the Torgau facility[33](index=33&type=chunk) - Per unit fiber costs for lumber production **increased by approximately 25%** in Q2 2025 compared to Q2 2024 due to strong demand, representing **approximately 80% of lumber cash production costs**[34](index=34&type=chunk) [Financial Position & Liquidity](index=8&type=section&id=Financial%20Position%20%26%20Liquidity) [Liquidity and Capital Structure](index=8&type=section&id=Liquidity%20and%20Capital%20Structure) As of June 30, 2025, Mercer International Inc. maintained $146.5 million in cash and cash equivalents, with total aggregate liquidity of $438.1 million. The balance sheet shows an increase in total assets and shareholders' equity compared to December 31, 2024 Financial Position and Liquidity (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $146,499 | $184,925 | | Working capital | $635,485 | $653,466 | | Total assets | $2,378,376 | $2,262,932 | | Long-term liabilities | $1,629,767 | $1,576,619 | | Total shareholders' equity | $446,491 | $429,775 | - As of June 30, 2025, the company had approximately **$291.6 million available** under its revolving credit facilities, resulting in **aggregate liquidity of about $438.1 million**[38](index=38&type=chunk) [Additional Information](index=8&type=section&id=Additional%20Information) [Earnings Release Call & Company Profile](index=8&type=section&id=Earnings%20Release%20Call%20%26%20Company%20Profile) Mercer International Inc. will host a conference call on August 1, 2025, to discuss the Q2 2025 results. The company is a global forest products company with operations in Germany, USA, and Canada, producing pulp, lumber, CLT, glulam, pallets, and biofuels - Conference call scheduled for **August 1, 2025, at 10:00 AM ET** to discuss Q2 2025 results, accessible via webcast[39](index=39&type=chunk) - 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 thousand tonnes of biofuels**[40](index=40&type=chunk) [Forward-Looking Statements](index=8&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from forecasts. Key risk factors include the cyclical nature of the business, raw material costs, indebtedness, competition, foreign exchange and interest rate fluctuations, and environmental regulations - The report includes forward-looking statements, identified by words such as "expects," "anticipates," "projects," "intends," "will," "believes," and "estimates," which involve known and unknown risks and uncertainties[41](index=41&type=chunk) - Factors that could cause actual results to differ materially include the highly cyclical nature of the business, raw material costs, level of indebtedness, competition, foreign exchange and interest rate fluctuations, expenditures for capital projects, and environmental regulation and compliance[41](index=41&type=chunk) [Non-GAAP Financial Measures (Operating EBITDA)](index=15&type=section&id=Non-GAAP%20Financial%20Measures%20(Operating%20EBITDA)) Operating EBITDA is defined as operating income (loss) plus depreciation, amortization, and long-lived asset impairment charges. Management uses it as a benchmark for operating results and relative to competitors, considering it a meaningful supplement to GAAP measures because depreciation and impairment are non-cash costs. It is not a GAAP measure and may not be comparable to other companies - **Operating EBITDA** is a **non-GAAP financial measure** defined as operating income (loss) plus depreciation and amortization and long-lived asset impairment charges[54](index=54&type=chunk) - Management uses **Operating EBITDA** as a **benchmark measurement** of its own operating results and relative to its competitors, considering it a **meaningful supplement to operating income (loss)** as depreciation and impairment are not actual cash costs[54](index=54&type=chunk) - **Operating EBITDA** is **not a measure of financial performance under GAAP** and should not be considered as an alternative to net loss or operating income (loss) or net cash from operating activities[55](index=55&type=chunk) Operating EBITDA Reconciliation (in thousands) | Metric (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------ | :------- | :------- | | Net loss | ($86,071) | ($22,339) | ($67,586) | ($108,410) | ($84,289) | | Income tax provision (recovery) | ($1,864) | $732 | $1,263 | ($1,132) | ($5,102) | | Interest expense | $28,411 | $28,155 | $26,843 | $56,566 | $54,402 | | Other expenses (income) | $1,120 | $185 | ($4,299) | $1,305 | ($9,238) | | Operating income (loss) | ($58,404) | $6,733 | ($43,779) | ($51,671) | ($44,227) | | Add: Depreciation and amortization | $37,523 | $40,355 | $39,941 | $77,878 | $80,345 | | Add: Loss on disposal of investment in joint venture | — | — | — | — | $23,645 | | Add: Goodwill impairment | — | — | $34,277 | — | $34,277 | | **Operating EBITDA** | **($20,881)** | **$47,088** | **$30,439** | **$26,207** | **$94,040** | [Financial Statements](index=12&type=section&id=Financial%20Statements) [Interim Consolidated Statements of Operations](index=12&type=section&id=Interim%20Consolidated%20Statements%20of%20Operations) The Interim Consolidated Statements of Operations detail Mercer International Inc.'s financial performance, showing revenues, various costs and expenses, operating loss, other income/expenses, and ultimately net loss and net loss per common share for the three and six months ended June 30, 2025 and 2024 Interim Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------- | :------- | | Revenues | $453,524 | $499,384 | $960,498 | $1,052,814 | | Cost of sales, excluding depreciation and amortization | $444,047 | $439,220 | $874,294 | $897,402 | | Cost of sales depreciation and amortization | $37,451 | $39,877 | $77,741 | $80,227 | | Selling, general and administrative expenses | $30,430 | $29,789 | $60,134 | $61,490 | | Loss on disposal of investment in joint venture | — | — | — | $23,645 | | Goodwill impairment | — | $34,277 | — | $34,277 | | Operating loss | ($58,404) | ($43,779) | ($51,671) | ($44,227) | | Interest expense | ($28,411) | ($26,843) | ($56,566) | ($54,402) | | Other income (expenses) | ($1,120) | $4,299 | ($1,305) | $9,238 | | Loss before income taxes | ($87,935) | ($66,323) | ($109,542) | ($89,391) | | Income tax recovery (provision) | $1,864 | ($1,263) | $1,132 | $5,102 | | Net loss | ($86,071) | ($67,586) | ($108,410) | ($84,289) | | Net loss per common share (Basic) | ($1.29) | ($1.01) | ($1.62) | ($1.26) | | Diluted | ($1.29) | ($1.01) | ($1.62) | ($1.26) | | Dividends declared per common share | $0.075 | $0.075 | $0.150 | $0.150 | [Interim Consolidated Balance Sheets](index=13&type=section&id=Interim%20Consolidated%20Balance%20Sheets) The Interim Consolidated Balance Sheets provide a snapshot of Mercer International Inc.'s financial position, detailing current and long-term assets, liabilities, and shareholders' equity as of June 30, 2025, compared to December 31, 2024 Interim Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | **ASSETS** | | | | Current assets | | | | Cash and cash equivalents | $146,499 | $184,925 | | Accounts receivable, net | $335,394 | $327,345 | | Inventories | $415,444 | $361,682 | | Prepaid expenses and other | $21,461 | $17,601 | | Assets classified as held for sale | $18,805 | $18,451 | | Total current assets | $937,603 | $910,004 | | Property, plant and equipment, net | $1,338,386 | $1,254,715 | | Amortizable intangible assets, net | $52,277 | $49,829 | | Operating lease right-of-use assets | $6,531 | $7,598 | | Pension asset | $8,707 | $9,378 | | Deferred income tax assets | $21,469 | $17,778 | | Other long-term assets | $13,403 | $13,630 | | Total assets | $2,378,376 | $2,262,932 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Current liabilities | | | | Accounts payable and other | $293,948 | $248,661 | | Pension and other post-retirement benefit obligations | $772 | $732 | | Liabilities associated with assets held for sale | $7,398 | $7,145 | | Total current liabilities | $302,118 | $256,538 | | Long-term debt | $1,526,743 | $1,473,986 | | Pension and other post-retirement benefit obligations | $12,645 | $11,134 | | Operating lease liabilities | $3,902 | $4,793 | | Deferred income tax liabilities | $74,027 | $74,772 | | Other long-term liabilities | $12,450 | $11,934 | | Total liabilities | $1,931,885 | $1,833,157 | | Shareholders' equity | | | | Common shares $1 par value; 200,000,000 authorized; 66,983,000 issued and outstanding (2024 – 66,871,000) | $66,871 | $66,850 | | Additional paid-in capital | $364,871 | $362,782 | | Retained earnings | $112,463 | $230,912 | | Accumulated other comprehensive loss | ($97,714) | ($230,769) | | Total shareholders' equity | $446,491 | $429,775 | | Total liabilities and shareholders' equity | $2,378,376 | $2,262,932 | [Interim Consolidated Statements of Cash Flows](index=14&type=section&id=Interim%20Consolidated%20Statements%20of%20Cash%20Flows) The Interim Consolidated Statements of Cash Flows present the cash generated from or used in operating, investing, and financing activities for Mercer International Inc. for the three and six months ended June 30, 2025 and 2024, showing a net decrease in cash and cash equivalents Interim Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------- | :------- | | Net cash from (used in) operating activities | ($4,526) | $62,185 | ($7,515) | $32,991 | | Net cash from (used in) investing activities | ($22,773) | ($20,154) | ($42,633) | ($37,638) | | Net cash from (used in) financing activities | ($3,268) | ($53,280) | $15,978 | ($46,459) | | Effect of exchange rate changes on cash and cash equivalents | ($4,407) | $150 | ($4,256) | $287 | | Net decrease in cash and cash equivalents | ($34,974) | ($11,099) | ($38,426) | ($50,819) | | Cash and cash equivalents, beginning of period | $181,473 | $274,272 | $184,925 | $313,992 | | Cash and cash equivalents, end of period | $146,499 | $263,173 | $146,499 | $263,173 |

PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company's unaudited interim consolidated financial statements reflect a net loss for the period with key changes in revenues, costs, and comprehensive income [Interim Consolidated Statements of Operations](index=3&type=section&id=MERCER%20INTERNATIONAL%20INC.%20INTERIM%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The company reported increased net losses compared to the prior year, driven by lower revenues and higher operating losses Operations Data | Metric (in thousands of U.S. dollars, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenues | $453,524 | $499,384 | $960,498 | $1,052,814 | | Operating loss | $(58,404) | $(43,779) | $(51,671) | $(44,227) | | Net loss | $(86,071) | $(67,586) | $(108,410) | $(84,289) | | Net loss per common share (Basic) | $(1.29) | $(1.01) | $(1.62) | $(1.26) | | Dividends declared per common share | $0.075 | $0.075 | $0.150 | $0.150 | [Interim Consolidated Statements of Comprehensive Income (Loss)](index=3&type=section&id=MERCER%20INTERNATIONAL%20INC.%20INTERIM%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(LOSS)) Total comprehensive income improved significantly from prior year losses, primarily due to positive foreign currency translation adjustments Comprehensive Income (Loss) | Metric (in thousands of U.S. dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net loss | $(86,071) | $(67,586) | $(108,410) | $(84,289) | | Foreign currency translation adjustments | $99,249 | $(14,611) | $133,586 | $(52,080) | | Total comprehensive income (loss) | $12,909 | $(82,381) | $24,645 | $(136,726) | [Interim Consolidated Balance Sheets](index=4&type=section&id=MERCER%20INTERNATIONAL%20INC.%20INTERIM%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets and shareholders' equity increased from year-end 2024, driven by higher property, plant, equipment, and inventories Balance Sheet Data | Metric (in thousands of U.S. dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total current assets | $937,603 | $910,004 | | Total assets | $2,378,376 | $2,262,932 | | Total current liabilities | $302,118 | $256,538 | | Long-term debt | $1,526,743 | $1,473,986 | | Total liabilities | $1,931,885 | $1,833,157 | | Total shareholders' equity | $446,491 | $429,775 | [Interim Consolidated Statements of Changes in Shareholders' Equity](index=5&type=section&id=MERCER%20INTERNATIONAL%20INC.%20INTERIM%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20SHAREHOLDERS'%20EQUITY) Shareholders' equity increased from year-end 2024 due to other comprehensive income, partially offset by net loss and dividends Changes in Shareholders' Equity | Metric (in thousands of U.S. dollars, except number of shares) | Balance as of December 31, 2024 | Six Months Ended June 30, 2025 | | :------------------------------------------------------------- | :------------------------------ | :----------------------------- | | Number of shares (thousands) | 66,871 | 66,983 | | Common shares at Par Value | $66,850 | $66,871 | | Additional Paid-in Capital | $362,782 | $364,871 | | Retained Earnings | $230,912 | $112,463 | | Accumulated Other Comprehensive Loss | $(230,769) | $(97,714) | | Total Shareholders' Equity | $429,775 | $446,491 | | Net loss (six months) | N/A | $(108,410) | | Dividends declared (six months) | N/A | $(10,039) | | Other comprehensive income (six months) | N/A | $133,055 | [Interim Consolidated Statements of Cash Flows](index=6&type=section&id=MERCER%20INTERNATIONAL%20INC.%20INTERIM%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The company experienced a net decrease in cash, with cash used in operating and investing activities partially offset by financing activities Cash Flow Data | Metric (in thousands of U.S. dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash from (used in) operating activities | $(7,515) | $32,991 | | Net cash from (used in) investing activities | $(42,633) | $(37,638) | | Net cash from (used in) financing activities | $15,978 | $(46,459) | | Net decrease in cash and cash equivalents | $(38,426) | $(50,819) | | Cash and cash equivalents, end of period | $146,499 | $263,173 | [Notes to the Interim Consolidated Financial Statements](index=7&type=section&id=MERCER%20INTERNATIONAL%20INC.%20NOTES%20TO%20THE%20INTERIM%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes provide detailed disclosures on accounting policies, financial statement items, segment performance, and other relevant information [Note 1. The Company and Summary of Significant Accounting Policies](index=7&type=section&id=Note%201.%20The%20Company%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's operations, basis of presentation, use of estimates, and assessment of new accounting pronouncements - The company's interim consolidated financial statements are prepared in accordance with **GAAP and SEC rules**, and should be read in conjunction with the latest annual report on Form 10-K[20](index=20&type=chunk) - Management makes **significant judgments and estimates** for various accounting areas, including impairment testing, depreciation, pension obligations, deferred income taxes, and inventory impairment[22](index=22&type=chunk) - The company is assessing the impact of new accounting pronouncements **ASU 2023-09** (Improvements to Income Tax Disclosures) and **ASU 2024-03** (Disaggregation of Income Statement Expenses), effective for annual periods beginning after December 15, 2024, and December 15, 2026, respectively[23](index=23&type=chunk)[26](index=26&type=chunk) [Note 2. Assets and Liabilities Classified as Held for Sale](index=8&type=section&id=Note%202.%20Assets%20and%20Liabilities%20Classified%20as%20Held%20for%20Sale) The company continues to actively market its sandalwood business, classifying its assets and liabilities as held for sale - The sandalwood business is actively marketed and **expected to be sold within 12 months**, with assets and liabilities classified as held for sale[27](index=27&type=chunk) Assets and Liabilities Held for Sale | Category | June 30, 2025 (in thousands) | | :---------------------------------------- | :--------------------------- | | Assets classified as held for sale | $18,805 | | Liabilities associated with assets held for sale | $7,398 | [Note 3. Inventories](index=8&type=section&id=Note%203.%20Inventories) Inventories increased as of June 30, 2025, with significant impairment charges recorded against raw materials and finished goods Inventory Balances | Inventory Category (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Raw materials | $145,352 | $131,396 | | Finished goods | $124,361 | $101,121 | | Spare parts and other | $145,731 | $129,165 | | Total Inventories | $415,444 | $361,682 | - For the three months ended June 30, 2025, the Company recorded **$11.0 million in inventory impairment charges** ($10.0 million for raw materials and $1.0 million for finished goods) due to low hardwood pulp prices, recorded in 'Cost of sales, excluding depreciation and amortization'[30](index=30&type=chunk) [Note 4. Accounts Payable and Other](index=9&type=section&id=Note%204.%20Accounts%20Payable%20and%20Other) Accounts payable and other liabilities increased significantly, primarily driven by increases in trade payables and accrued expenses Accounts Payable and Other Liabilities | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Trade payables | $78,742 | $53,610 | | Accrued expenses | $97,132 | $73,755 | | Income tax payable | $14,616 | $30,459 | | Total | $293,948 | $248,661 | [Note 5. Debt](index=9&type=section&id=Note%205.%20Debt) Total debt increased due to higher borrowings under revolving credit facilities and finance lease liabilities Debt Structure | Debt Instrument (in thousands) | Maturity | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------- | :------------ | :---------------- | | 12.875% senior notes | 2028 | $400,000 | $400,000 | | 5.125% senior notes | 2029 | $875,000 | $875,000 | | €370.1M German joint revolving credit facility | 2027 | $196,310 | $168,822 | | C$160.0M Canadian joint revolving credit facility | 2027 | $20,891 | $347 | | Finance lease liability | N/A | $54,364 | $48,214 | | Total Debt | N/A | $1,526,743 | $1,473,986 | - As of June 30, 2025, the Company was **in compliance with the terms of its debt agreements**[34](index=34&type=chunk) - The German revolving credit facility had approximately **€167.5 million ($196,310) drawn** at an interest rate of 3.446% as of June 30, 2025, with €175.2 million ($205,412) available[38](index=38&type=chunk) - The Canadian revolving credit facility had approximately **C$28.5 million ($20,891) drawn** at an interest rate of 4.481% as of June 30, 2025, with C$117.6 million ($86,152) available[38](index=38&type=chunk) [Note 6. Pension and Other Post-Retirement Benefit Obligations](index=12&type=section&id=Note%206.%20Pension%20and%20Other%20Post-Retirement%20Benefit%20Obligations) Net benefit costs for defined benefit pension plans decreased compared to the prior year, primarily due to higher expected returns Pension and Benefit Costs | Metric (in thousands of U.S. dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Pension Net benefit costs (gains) | $215 | $489 | $423 | $757 | | Other Post Retirement Benefits Net benefit costs (gains) | $(40) | $(58) | $(79) | $(116) | | Defined contribution plan contributions | $402 | $318 | $613 | $638 | | Multiemployer plan contributions | $683 | $613 | $1,389 | $1,134 | [Note 7. Income Taxes](index=13&type=section&id=Note%207.%20Income%20Taxes) The company reported an income tax recovery, with effective tax rates differing significantly from the U.S. Federal statutory rate Income Tax Details | Metric (in thousands of U.S. dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | U.S. Federal statutory rate | 21% | 21% | 21% | 21% | | Income tax recovery (provision) | $1,864 | $(1,263) | $1,132 | $5,102 | | Current income tax recovery (provision) | $232 | $6,059 | $(10,006) | $(1,002) | | Deferred income tax recovery (provision) | $1,632 | $(7,322) | $11,138 | $6,104 | - **Effective tax rates differed from statutory rates** due to non-recognition of tax recoveries for certain entities and the non-deductibility of goodwill impairment in 2024[45](index=45&type=chunk) [Note 8. Shareholders' Equity](index=13&type=section&id=Note%208.%20Shareholders'%20Equity) The company declared quarterly dividends and reported stock-based compensation activity, with shares remaining available for grant Dividend Declarations | Dividend Declaration | Date Declared | Dividend Per Common Share | Amount (in thousands) | | :------------------- | :--------------- | :------------------------ | :-------------------- | | Q1 2025 | February 20, 2025 | $0.075 | $5,015 | | Q2 2025 | May 1, 2025 | $0.075 | $5,024 | | Total (Six Months) | N/A | $0.150 | $10,039 | - As of June 30, 2025, approximately **2.6 million common shares were available for grant** under the stock incentive plan[47](index=47&type=chunk) Stock-Based Awards Activity | Stock-Based Awards Activity (Number of units) | Balance as of January 1, 2025 | Granted | Forfeited | Vested | Balance as of June 30, 2025 | | :-------------------------------------------- | :---------------------------- | :-------- | :---------- | :-------- | :-------------------------- | | PSUs | 4,379,461 | 2,241,640 | (1,452,061) | N/A | 5,169,040 | | Restricted Shares | 21,054 | 111,732 | N/A | (21,054) | 111,732 | | Equity DSUs | 50,397 | 101,956 | N/A | (50,397) | 101,956 | | Cash Only DSUs | 31,581 | 55,866 | N/A | (31,581) | 55,866 | [Note 9. Net Loss Per Common Share](index=14&type=section&id=Note%209.%20Net%20Loss%20Per%20Common%20Share) Basic and diluted net loss per common share increased compared to the prior year periods Net Loss Per Share Calculation | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net loss (in thousands) | $(86,071) | $(67,586) | $(108,410) | $(84,289) | | Basic Net loss per common share | $(1.29) | $(1.01) | $(1.62) | $(1.26) | | Diluted Net loss per common share | $(1.29) | $(1.01) | $(1.62) | $(1.26) | | Weighted average common shares outstanding (Basic) | 66,914,282 | 66,816,843 | 66,903,741 | 66,729,416 | - Non-vested instruments excluded from diluted net loss per common share calculation due to anti-dilutive effect for the six months ended June 30, 2025, included **5,169,040 PSUs, 111,732 restricted shares, and 101,956 Equity DSUs**[54](index=54&type=chunk) [Note 10. Accumulated Other Comprehensive Loss](index=15&type=section&id=Note%2010.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss decreased significantly, driven by positive foreign currency translation adjustments Changes in Accumulated Other Comprehensive Loss | Component (in thousands of U.S. dollars) | Balance as of December 31, 2024 | Six Months Ended June 30, 2025 | | :--------------------------------------- | :------------------------------ | :----------------------------- | | Foreign Currency Translation Adjustments | $(249,997) | $(116,411) | | Defined Benefit Pension and Other Post Retirement Benefit Items | $19,228 | $18,697 | | Total Accumulated Other Comprehensive Loss | $(230,769) | $(97,714) | | Other comprehensive income (six months) | N/A | $133,055 | [Note 11. Related Party Transactions](index=15&type=section&id=Note%2011.%20Related%20Party%20Transactions) The company engaged in transactions with its partially owned logging, chipping, and wood purchasing operations Related Party Transactions | Related Party Transaction (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Services from 20% owned logging/chipping operation | $805 | $1,071 | $3,774 | $4,195 | | Payable balance to logging/chipping operation (June 30, 2025) | $158 | N/A | N/A | N/A | | Services from 26% owned wood purchasing operation | $3,434 | $1,367 | $5,662 | $2,315 | | Payable balance to wood purchasing operation (June 30, 2025) | $100 | N/A | N/A | N/A | [Note 12. Segment Information](index=17&type=section&id=Note%2012.%20Segment%20Information) The company operates in two reportable segments, Pulp and Solid Wood, both of which experienced revenue declines - The company's two reportable segments are **Pulp** (manufacture, sale, and distribution of pulp, electricity, and chemicals) and **Solid Wood** (manufacture, sale, and distribution of lumber, manufactured products, wood pallets, electricity, biofuels, and wood residuals)[59](index=59&type=chunk) - In 2024, the company changed its segment measure from operating income (loss) to net income (loss) before interest, tax, depreciation and amortization and impairments of long-lived assets ('**Segment Operating EBITDA**')[61](index=61&type=chunk) Segment Financials | Segment Financials (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Pulp Revenues | $332,308 | $367,371 | $713,388 | $799,775 | | Solid Wood Revenues | $117,268 | $130,238 | $239,988 | $249,261 | | Pulp Segment Operating EBITDA | $(10,262) | $31,674 | $39,610 | $100,139 | | Solid Wood Segment Operating EBITDA | $(4,861) | $3,124 | $(5,153) | $2,229 | Revenues by Major Products | Revenues by Major Products (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Pulp | $313,705 | $346,808 | $670,669 | $755,103 | | Lumber | $66,332 | $53,910 | $131,718 | $109,792 | | Manufactured products | $12,418 | $35,381 | $31,242 | $52,094 | | Pallets | $26,586 | $26,741 | $49,763 | $54,761 | [Note 13. Financial Instruments and Fair Value Measurement](index=28&type=section&id=Note%2013.%20Financial%20Instruments%20and%20Fair%20Value%20Measurement) The company's financial instruments are primarily valued using Level 2 inputs, with carrying amounts approximating fair value Fair Value of Financial Instruments | Description (in thousands) | Fair value as of June 30, 2025 (Level 2) | Fair value as of December 31, 2024 (Level 2) | | :------------------------- | :--------------------------------------- | :------------------------------------------- | | Revolving credit facilities | $217,201 | $169,169 | | Senior notes | $1,119,442 | $1,186,921 | | Total | $1,336,643 | $1,356,090 | - The **carrying value of revolving credit facilities approximates fair value** due to variable interest rates reflecting current market conditions[88](index=88&type=chunk) - The company's maximum exposure to credit risk as of June 30, 2025, was **$146.5 million for cash and cash equivalents** and **$335.4 million for accounts receivable**[93](index=93&type=chunk) [Note 14. Commitments and Contingencies](index=30&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) The company is involved in routine legal actions and has a conditional asset retirement obligation for asbestos removal - Management believes the outcome of pending or threatened legal actions and claims **will not have a material adverse effect** on the company's consolidated financial condition, results of operations, or liquidity[95](index=95&type=chunk) - The company has a conditional asset retirement obligation for asbestos removal, but the timing is indeterminate, making it currently **impossible to reasonably estimate its fair value**[95](index=95&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=31&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) The company uses the non-GAAP measure 'Operating EBITDA' as a benchmark for operating results and competitor comparison - **Operating EBITDA** is defined as operating loss plus depreciation and amortization and long-lived asset impairment charges[98](index=98&type=chunk) - Operating EBITDA is used as a **benchmark for operating results** and relative to competitors, as depreciation and impairment charges are non-cash and vary widely[98](index=98&type=chunk) - Operating EBITDA has limitations as it does not reflect cash expenditures, working capital changes, interest expense, derivative impacts, or investment impairment charges, and should be considered a **supplemental measure**[100](index=100&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=32&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's financial condition and results of operations, covering market environment, segment performance, and liquidity [Current Market Environment](index=32&type=section&id=Current%20Market%20Environment) Pulp sales realizations were strong in North America and Europe but decreased in China, while lumber sales realizations increased - **NBSK pulp sales realizations were strong** in North America and Europe in Q2 2025, but decreased in China due to weak demand and global trade policy uncertainty[107](index=107&type=chunk)[114](index=114&type=chunk) - **Lumber sales realizations increased** in the U.S. and Europe in Q2 2025 due to stable demand and reduced supply[108](index=108&type=chunk) - Expected Q3 2025 outlook: **NBSK pulp prices to decrease**, NBHK pulp prices to remain steady, lumber prices to modestly increase in Europe and the U.S., and pallet prices to remain flat[110](index=110&type=chunk)[111](index=111&type=chunk) - **Per unit fiber costs for the pulp segment increased** in Q2 2025 due to strong demand and steady supply, with expectations for lower costs at German mills and stable costs at Canadian mills in Q3 2025[112](index=112&type=chunk) [Summary Financial Highlights](index=34&type=section&id=Summary%20Financial%20Highlights) The company reported decreased revenues and a shift to negative Operating EBITDA for the three and six months ended June 30, 2025 Key Financial Metrics | Metric (in thousands, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total revenues | $453,524 | $499,384 | $960,498 | $1,052,814 | | Pulp Segment Operating EBITDA | $(10,262) | $31,674 | $39,610 | $100,139 | | Solid wood Segment Operating EBITDA | $(4,861) | $3,124 | $(5,153) | $2,229 | | Operating EBITDA | $(20,881) | $30,439 | $26,207 | $94,040 | | Net loss | $(86,071) | $(67,586) | $(108,410) | $(84,289) | | Net loss per common share (Basic) | $(1.29) | $(1.01) | $(1.62) | $(1.26) | Reconciliation to Operating EBITDA | Reconciliation to Operating EBITDA (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net loss | $(86,071) | $(67,586) | $(108,410) | $(84,289) | | Operating loss | $(58,404) | $(43,779) | $(51,671) | $(44,227) | | Add: Depreciation and amortization | $37,523 | $39,941 | $77,878 | $80,345 | | Add: Goodwill impairment | — | $34,277 | — | $34,277 | | Operating EBITDA | $(20,881) | $30,439 | $26,207 | $94,040 | [Consolidated – Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=37&type=section&id=Consolidated%20%E2%80%93%20Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) Consolidated revenues decreased by 9% in Q2 2025, leading to an increased operating loss and a net loss of $86.1 million - Total revenues **decreased by approximately 9% to $453.5 million** in Q2 2025, primarily due to lower pulp and manufactured products sales realizations and volumes[120](index=120&type=chunk) - **Operating loss was $58.4 million** in Q2 2025, compared to $43.8 million in Q2 2024, driven by lower pulp and manufactured products sales, negative foreign exchange impacts ($21.1 million), higher per unit fiber costs, and an $11.0 million hardwood inventory impairment[123](index=123&type=chunk)[124](index=124&type=chunk) - **Net loss was $86.1 million** ($1.29 per share) in Q2 2025, compared to $67.6 million ($1.01 per share) in Q2 2024, which included a $34.3 million goodwill impairment[128](index=128&type=chunk) - Operating EBITDA **decreased to negative $20.9 million** in Q2 2025 from positive $30.4 million in Q2 2024[128](index=128&type=chunk) [Pulp Segment – Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=39&type=section&id=Pulp%20Segment%20%E2%80%93%20Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) The Pulp segment's revenues decreased by 10% in Q2 2025, and Segment Operating EBITDA turned negative Pulp Segment Performance | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Pulp revenues | $313,705 | $346,808 | | Energy and chemical revenues | $18,603 | $20,563 | | Segment Operating EBITDA | $(10,262) | $31,674 | - Total pulp production **increased by 8% to 457,117 ADMTs** in Q2 2025 due to fewer planned annual maintenance downtime days (23 days in 2025 vs 37 days in 2024)[133](index=133&type=chunk) - Average NBSK pulp sales realizations **decreased by 7% to $758 per ADMT**, and average NBHK pulp sales realizations **decreased by 18% to $575 per ADMT** in Q2 2025, primarily due to lower net prices in China[139](index=139&type=chunk) - A **negative foreign exchange impact of approximately $17.7 million** on Segment Operating EBITDA was recorded in Q2 2025[140](index=140&type=chunk) - An **$11.0 million non-cash impairment** was recorded against hardwood inventory at the Peace River mill due to low hardwood pulp prices[141](index=141&type=chunk) - Overall average per unit fiber costs **increased by approximately 11%** in Q2 2025 due to reduced supply at German mills[143](index=143&type=chunk) [Solid Wood Segment – Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=42&type=section&id=Solid%20Wood%20Segment%20%E2%80%93%20Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) The Solid Wood segment's revenues decreased by 10% in Q2 2025, and Segment Operating EBITDA turned negative Solid Wood Segment Performance | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Lumber revenues | $66,332 | $53,910 | | Manufactured products revenues | $12,418 | $35,381 | | Pallet revenues | $26,586 | $26,741 | | Segment Operating EBITDA | $(4,861) | $3,124 | - Lumber revenues **increased by approximately 23% to $66.3 million** in Q2 2025, driven by higher sales realizations[149](index=149&type=chunk) - Manufactured products revenues **decreased by approximately 65% to $12.4 million** in Q2 2025 due to lower sales realizations and volumes, impacted by elevated interest rates in the U.S[150](index=150&type=chunk) - Average lumber sales realizations **increased by approximately 19% to $550 per Mfbm** in Q2 2025 due to lower supply and improved demand[153](index=153&type=chunk) - Per unit fiber costs for lumber production **increased by approximately 25%** in Q2 2025 due to strong demand[154](index=154&type=chunk) [Consolidated – Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=43&type=section&id=Consolidated%20%E2%80%93%20Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) Consolidated revenues decreased by 9% for the first half of 2025, resulting in an increased operating loss and a net loss of $108.4 million - Total revenues **decreased by approximately 9% to $960.5 million** in the first half of 2025, driven by lower sales volumes and realizations from pulp and manufactured products[157](index=157&type=chunk) - **Operating loss was $51.7 million** in the first half of 2025, compared to $44.2 million in the first half of 2024, impacted by higher per unit fiber costs, lower pulp and manufactured products sales, negative foreign exchange ($12.0 million), and an $11.0 million hardwood inventory impairment[160](index=160&type=chunk)[161](index=161&type=chunk) - **Net loss was $108.4 million** ($1.62 per share) in the first half of 2025, compared to $84.3 million ($1.26 per share) in the first half of 2024, which included a $34.3 million goodwill impairment and a $23.6 million loss from the CPP joint venture dissolution[166](index=166&type=chunk) - Operating EBITDA **decreased to $26.2 million** in the first half of 2025 from $94.0 million in the first half of 2024[167](index=167&type=chunk) [Pulp Segment – Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=44&type=section&id=Pulp%20Segment%20%E2%80%93%20Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) The Pulp segment's revenues decreased by 11% for the first half of 2025, with a significant decline in Segment Operating EBITDA Pulp Segment Performance (Six Months) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Pulp revenues | $670,669 | $755,103 | | Energy and chemical revenues | $42,719 | $44,672 | | Segment Operating EBITDA | $39,610 | $100,139 | - Total pulp production **decreased by 5% to 916,026 ADMTs** in the first half of 2025, primarily due to the dissolution of the CPP joint venture in March 2024[171](index=171&type=chunk) - Total pulp sales volumes **decreased by 9% to 904,610 ADMTs** in the first half of 2025[173](index=173&type=chunk) - Average NBSK pulp sales realizations were **relatively flat at $771 per ADMT**, while average NBHK pulp sales realizations **decreased by 13% to $572 per ADMT** in the first half of 2025[177](index=177&type=chunk) - Overall average per unit fiber costs **increased by approximately 5%** in the first half of 2025 due to higher costs at German mills[181](index=181&type=chunk) [Solid Wood Segment – Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=46&type=section&id=Solid%20Wood%20Segment%20%E2%80%93%20Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) The Solid Wood segment's revenues modestly decreased for the first half of 2025, and Segment Operating EBITDA turned negative Solid Wood Segment Performance (Six Months) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Lumber revenues | $131,718 | $109,792 | | Manufactured products revenues | $31,242 | $52,094 | | Pallet revenues | $49,763 | $54,761 | | Segment Operating EBITDA | $(5,153) | $2,229 | - Lumber revenues **increased by approximately 20% to $131.7 million** in the first half of 2025, driven by higher sales realizations and volumes[187](index=187&type=chunk) - Manufactured products revenues **decreased by approximately 40% to $31.2 million** in the first half of 2025 due to lower sales realizations and volumes, impacted by elevated interest rates[188](index=188&type=chunk) - Average lumber sales realizations **increased by approximately 14% to $524 per Mfbm** in the first half of 2025[191](index=191&type=chunk) - Per unit fiber costs for lumber production **increased by approximately 18%** in the first half of 2025 due to strong demand[192](index=192&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity was impacted by cash used in operations and investing, leading to the suspension of its quarterly dividend [Summary of Cash Flows](index=47&type=section&id=Summary%20of%20Cash%20Flows) The company used cash in operating activities, a shift from the prior year, and continued to use cash in investing activities Cash Flow Summary | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash from (used in) operating activities | $(7,515) | $32,991 | | Net cash used in investing activities | $(42,633) | $(37,638) | | Net cash from (used in) financing activities | $15,978 | $(46,459) | | Net decrease in cash and cash equivalents | $(38,426) | $(50,819) | - On August 1, 2025, the board of directors **suspended the quarterly dividend** due to ongoing market and global trade environment uncertainties[196](index=196&type=chunk) - Capital expenditures for the first half of 2025 were **$44.4 million**, primarily for mill upgrades and strategic projects[198](index=198&type=chunk) [Sources and Uses of Funds](index=48&type=section&id=Sources%20and%20Uses%20of%20Funds) The company's primary funding sources are cash from operations and cash on hand, with total liquidity at $438.1 million Key Expenditures | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Capital expenditures | $44,413 | $36,344 | | Cash paid for interest expense | $53,415 | $51,529 | | Interest expense | $56,566 | $54,402 | - As of June 30, 2025, the company had cash and cash equivalents of $146.5 million and approximately $291.6 million available under revolving credit facilities, totaling **$438.1 million in aggregate liquidity**[205](index=205&type=chunk) - Planned capital expenditures for fiscal 2025 are expected to be between **$90.0 million to $100.0 million**, a reduction from previous plans[205](index=205&type=chunk) [Debt Covenants](index=50&type=section&id=Debt%20Covenants) As of June 30, 2025, the company was in full compliance with all covenants of its indebtedness - The company was in **full compliance with all debt covenants** as of June 30, 2025[210](index=210&type=chunk) [Contractual Obligations and Commitments](index=50&type=section&id=Contractual%20Obligations%20and%20Commitments) There were no material changes outside the ordinary course of business to the company's contractual obligations - **No material changes** to contractual obligations occurred during the six months ended June 30, 2025[211](index=211&type=chunk) [Foreign Currency](index=50&type=section&id=Foreign%20Currency) The company's results are exposed to foreign currency fluctuations, particularly between the U.S. dollar, Euro, and Canadian dollar - A weaker U.S. dollar against the Euro and Canadian dollar as of June 30, 2025, led to a **non-cash increase of $133.6 million** in the carrying value of net assets denominated in these currencies[214](index=214&type=chunk) - This non-cash increase **improved accumulated other comprehensive loss to $97.7 million** and increased total equity, without affecting net loss, Operating EBITDA, or cash[214](index=214&type=chunk) [Critical Accounting Policies](index=50&type=section&id=Critical%20Accounting%20Policies) The preparation of financial statements requires management to make significant estimates and assumptions in key areas - **Significant management judgment** is required for estimates in areas such as impairment testing for goodwill and long-lived assets, depreciation, pension obligations, deferred income taxes, and inventory impairment[217](index=217&type=chunk) [Cautionary Statement Regarding Forward-Looking Information](index=51&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Information) The report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially - **Forward-looking statements** are based on management's expectations and involve risks and uncertainties that could cause actual conditions, events, or results to differ significantly[221](index=221&type=chunk) - Key risks include the **cyclical nature of the business**, fluctuations in raw material prices (especially fiber), inflation, geopolitical conflicts, international trade policies, intense competition, climate change, and potential production disruptions[223](index=223&type=chunk) - Additional risks relate to the company's **debt levels, macroeconomic conditions** (e.g., global economy, interest rates, currency exchange rates), and legal/regulatory compliance[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) [Cyclical Nature of Business](index=53&type=section&id=Cyclical%20Nature%20of%20Business) The pulp and lumber industries are highly cyclical, with prices and demand sensitive to global economic and industry conditions [Revenues](index=53&type=section&id=Revenues) Pulp and lumber markets are highly cyclical, with prices and demand influenced by global macroeconomic conditions and industry capacity - Pulp and lumber markets are **highly cyclical**, sensitive to global economic conditions, industry capacity, and foreign exchange rates, leading to volatile prices[229](index=229&type=chunk)[231](index=231&type=chunk) - Competition is generally **based on price**, which is determined by supply relative to demand, and prices may fall below cash production costs[236](index=236&type=chunk) - Demand for lumber is significantly influenced by **housing starts**, especially in the U.S., and demand for CLT and glulam is driven by the wood construction market and low-carbon economy policies[233](index=233&type=chunk) [Costs](index=54&type=section&id=Costs) Production costs are heavily influenced by the availability and cost of raw materials, particularly fiber - Production costs are influenced by raw material availability and cost (fiber, energy, labor), with **fiber costs primarily affected by lumber and pulp supply and demand**[237](index=237&type=chunk) - **Higher fiber prices can reduce profit margins** if price increases cannot be passed to customers[237](index=237&type=chunk) [Currency](index=54&type=section&id=Currency) The company is exposed to currency exchange rate fluctuations as most operating costs are in foreign currencies while sales are U.S. dollar-quoted - The company's operating costs are primarily in Euros and Canadian dollars, while most sales are U.S. dollar-quoted, exposing it to **currency exchange rate fluctuations**[238](index=238&type=chunk) - A strengthening U.S. dollar benefits costs, but a **weakening U.S. dollar relative to the Euro and Canadian dollar adversely affects operating margins** and cash flow[238](index=238&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=55&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks from changes in interest rates and foreign currency exchange rates - The company is exposed to market risks from changes in **interest rates and foreign currency exchange rates** (U.S. dollar vs Euro and Canadian dollar)[240](index=240&type=chunk) - These market risks are managed through **internal risk management policies** and the periodic use of derivatives[240](index=240&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=55&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls [Disclosure Controls and Procedures](index=55&type=section&id=Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025 - Disclosure controls and procedures were evaluated and **deemed effective as of June 30, 2025**, by management, including the principal executive and financial officers[242](index=242&type=chunk) [Changes in Internal Controls](index=55&type=section&id=Changes%20in%20Internal%20Controls) No material changes were made to the company's internal control over financial reporting during the period - **No material changes** in internal control over financial reporting occurred during the reporting period[244](index=244&type=chunk) PART II. OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=56&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in routine litigation not expected to have a material adverse effect on its business - The company is subject to routine litigation, but management believes the outcome **will not materially adversely affect** its business or financial condition[246](index=246&type=chunk) [ITEM 1A. RISK FACTORS](index=56&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to risk factors were reported since the company's 2024 annual report on Form 10-K - **No material changes to risk factors** were reported since the last annual report on Form 10-K[247](index=247&type=chunk) [ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS](index=56&type=section&id=ITEM%202.%20UNREGISTERED%20SALE%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities or use of proceeds to report for the period [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=56&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There were no defaults upon senior securities to report for the period [ITEM 4. MINE SAFETY DISCLOSURES](index=56&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) There were no mine safety disclosures to report for the period [ITEM 5. OTHER INFORMATION](index=56&type=section&id=ITEM%205.%20OTHER%20INFORMATION) There was no other information to report for the period [ITEM 6. EXHIBITS](index=57&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including certifications and iXBRL data - Exhibits include **Section 302 and 906 Certifications** of the Chief Executive Officer and Chief Financial Officer, and financial information formatted in iXBRL[252](index=252&type=chunk) [SIGNATURES](index=58&type=section&id=SIGNATURES) The report was duly signed by the Chief Financial Officer on behalf of the company on July 31, 2025 - The report was signed by **Richard Short, Chief Financial Officer and Authorized Officer**, on July 31, 2025[256](index=256&type=chunk)

Core Insights - Mercer International Inc. reported a significant decline in Operating EBITDA, posting negative $20.9 million for Q2 2025, down from positive $30.4 million in Q2 2024 and $47.1 million in Q1 2025 [2][9][37] - The company experienced a net loss of $86.1 million ($1.29 per share) in Q2 2025, compared to a net loss of $67.6 million ($1.01 per share) in Q2 2024 and $22.3 million ($0.33 per share) in Q1 2025 [2][9][37] - The decline in performance is attributed to ongoing uncertainties in the global trade environment, weaker demand for pulp in China, and a depreciation of the dollar, which negatively impacted Operating EBITDA by approximately $26 million [3][9][37] Financial Performance - Total revenues for Q2 2025 decreased by approximately 9% to $453.5 million from $499.4 million in Q2 2024, primarily due to lower sales realizations and volumes from pulp and manufactured products, partially offset by higher lumber sales realizations [14][35] - Costs and expenses in Q2 2025 decreased by approximately 6% to $511.9 million from $543.2 million in Q2 2024, driven by fewer days of planned maintenance downtime at pulp mills [15][35] - The company reported a total net loss of $108.4 million for the first half of 2025, compared to a net loss of $84.3 million in the same period of 2024 [36][48] Segment Analysis - In the pulp segment, revenues decreased by approximately 10% to $332.3 million in Q2 2025 from $367.4 million in Q2 2024, primarily due to lower pulp sales realizations and volumes [19][22] - The solid wood segment saw revenues decrease by approximately 10% to $117.3 million in Q2 2025 from $130.2 million in Q2 2024, mainly due to lower manufactured products revenues, despite higher lumber revenues [28][29] - Lumber revenues increased by approximately 23% to $66.3 million in Q2 2025 from $53.9 million in Q2 2024, driven by higher sales realizations [29][30] Operational Highlights - The company had 29 days of downtime in Q2 2025, which included 23 days of planned annual maintenance and six additional days due to slower than expected start-up [11][25] - Total pulp production increased by approximately 8% to 457,117 ADMTs in Q2 2025 compared to 421,692 ADMTs in Q2 2024, attributed to fewer days of planned maintenance downtime [24][25] - Average per unit fiber costs increased by approximately 11% in Q2 2025 compared to Q2 2024, primarily due to higher costs at German mills [26][34] Strategic Initiatives - The company is implementing cost reduction initiatives under the "One Goal One Hundred" program, targeting $100 million in profitability improvement actions by the end of 2026, with approximately $5 million in cost savings realized to date [5][9] - The quarterly dividend has been suspended to prudently allocate capital amidst ongoing market uncertainties [9][12]

Company Overview - Mercer International Inc. is a global forest products company with operations in Germany, the United States, and Canada [4] - The company has a consolidated annual production capacity of 2.1 million tonnes of pulp, 960 million board feet of lumber, 210,000 cubic meters of cross-laminated timber, 45,000 cubic meters of glulam, 17 million pallets, and 230,000 metric tonnes of biofuels [4] Upcoming Financial Results - Mercer International will release its second quarter results for the period ending June 30, 2025, on Thursday, July 31, 2025, after the close of the market [1] - A conference call will be hosted by Juan Carlos Bueno, President and CEO, and Richard Short, CFO and Secretary, on Friday, August 1, 2025, at 10:00 am ET to discuss the results [1] Conference Call Details - The conference call will be available live over the Internet through a webcast [2] - Participants must register to join the live call and ask questions, with registration available via a specific URL [3] - A replay of the webcast will be archived and accessible through the company's website for those unable to participate live [2]

Core Insights - Mercer International Inc. has received an updated ESG Risk Rating of 16.8 from Sustainalytics, improving from the previous rating of 17.4 in 2024, indicating ongoing progress in ESG risk management [1][2] - The company remains in the "low" risk category and ranks in the top 15th percentile within the global Paper and Forestry industry sector [3] - Mercer achieved a "Strong" management rating across all material ESG issues and maintained "Low" or "Negligible" risk ratings in key areas such as emissions, waste, and corporate governance [4] Company Overview - Mercer International Inc. operates in Germany, the USA, and Canada, with a consolidated annual production capacity of 2.1 million tonnes of pulp, 960 million board feet of lumber, and various other products including biofuels [6] ESG Management - The improvement in the ESG Risk Rating reflects tangible progress in managing key sustainability risks, particularly in emissions tracking and governance [5] - The Sustainalytics ESG Risk Rating assesses a company's exposure to industry-specific ESG risks and its management of those risks, classified into five categories: negligible, low, medium, high, and severe [3][8]