Company Overview - Mercer International Inc. (NASDAQ:MERC) operates through two segments: Pulp and Wood Products, manufacturing northern bleached softwood kraft pulp and operating facilities across multiple regions [3]. Financial Performance - In the third-quarter 2025 earnings call, Mercer reported negative EBITDA of $28 million, which included a $20 million non-cash inventory impairment, compared to negative EBITDA of $21 million in the prior quarter [2]. - The company has outlined plans to achieve $30 million in cost savings and reliability improvements by the end of 2025, as part of a broader initiative targeting $100 million in profitability improvement by the end of 2026 [2]. Market Position and Outlook - The mass timber segment has built an $80 million order backlog and is expected to see improved performance in 2026 as markets recover [2]. - Despite near-term financial pressures, Mercer's cost-reduction initiatives, operational leverage to a pulp recovery, and growing engineered wood backlog provide upside potential if pricing stabilizes, offering speculative investors exposure to a cyclical rebound opportunity [2]. Analyst Ratings - On January 21, TD Cowen downgraded Mercer International Inc. from Hold to Sell and raised its price target to $2.25 from $2, citing high leverage and expected negative free cash flow despite pulp markets nearing a cyclical floor [1].

Mercer International Inc. ( MERC ) presented Q4 '25 results this week. I had not analyzed the company since the Q2 '25 results, when I started covering the name in October 2025 .Long-only investment, evaluating companies from an operational, buy-and-hold perspective.Quipus Capital does not focus on market-driven dynamics and future price action. Instead, our articles focus on operational aspects, understanding the long-term earnings power of companies, the competitive dynamics of the industries where they p ...

Group 1 - Mercer International Inc. (MERC) presented Q4 '25 results this week, marking the first analysis since Q2 '25 results [1] - The company has been covered since October 2025, indicating a focus on long-term operational performance rather than short-term market dynamics [2] Group 2 - The analysis emphasizes understanding the long-term earnings power of companies and the competitive dynamics within their industries [2] - The investment strategy is centered around holding companies for the long term, with a focus on operational aspects rather than market-driven price actions [2]

Financial Data and Key Metrics Changes - The operating EBITDA for Q4 was negative $20 million, an improvement of $8 million compared to Q3, primarily due to stable production and the One Goal 100 program, despite market headwinds [3][4] - The consolidated net loss for Q4 was $309 million, or $4.61 per share, compared to a net loss of $81 million, or $1.21 per share in Q3 [13] - Total non-cash impairment charges for Q4 amounted to $260 million, or $3.22 per share, with $204 million related to the Peace River Mill [3][4] Business Line Data and Key Metrics Changes - Both the pulp and solid wood segments reported negative quarterly EBITDA of $11 million in Q4 [4] - Softwood sales realizations decreased to $702 per ton from $728 per ton in Q3, while North American NBSK list prices averaged $1,568 per ton, down $132 from Q3 [5][6] - Lumber production decreased by about 6% to 109 million board feet in Q4, with sales volumes dropping to 103 million board feet, a decline of about 7% from Q3 [10] Market Data and Key Metrics Changes - The NBSK net price in China declined to $671 per ton, a $19 decrease from Q3, while European NBSK prices remained stable at $1,498 per ton [5][6] - Hardwood sales realizations were flat at $528 per ton compared to Q3, with the average net price for eucalyptus hardwood increasing to $540 per ton, up $37 from Q3 [6][7] - Fiber costs for both pulp and solid wood segments remained steady in Q4, but are expected to increase in Q1 2026 due to supply constraints [10][11] Company Strategy and Development Direction - The company is focused on returning the Peace River mill to profitability through strategic initiatives, including expanding softwood pulp production and exploring government support for energy generation [4][16] - The One Goal 100 program aims to improve profitability by $100 million by the end of 2026, with approximately $30 million in cost savings realized in 2025 [12][15] - The company is transitioning from hardwood to softwood production at the Peace River mill, aiming for a 50/50 split by the end of the year [46] Management's Comments on Operating Environment and Future Outlook - Management noted that ongoing market headwinds and trade uncertainties are impacting operational performance, but underlying performance has improved [14][19] - The company expects modest price improvements for NBSK and NBHK in Q1, while trade uncertainty continues to affect supply-demand dynamics [20][21] - Management is optimistic about the mass timber business, expecting revenues to exceed $120 million in 2026, driven by a healthy order book [25][26] Other Important Information - The company reported an improvement in aggregate liquidity of over $54 million to $430 million, attributed to working capital management and cost reduction activities [12] - Planned capital expenditures for 2026 are expected to be between $60 million and $80 million, focusing on maintenance and environmental projects [27] Q&A Session Summary Question: Can you say how much headroom that you have under any of your maintenance covenants as of December thirty-first? - Management is comfortable that they are well under the covenants at the end of the quarter, but expects them to tighten as the year progresses due to a weak outlook [30] Question: Any thoughts on asset recycling opportunities to expedite potential deleveraging of the balance sheet? - The company is analyzing asset sales or restructuring as part of their debt reduction plans, but acknowledges that current market conditions are not favorable for realizing reasonable value [39] Question: Is there any thought to potentially closing the Peace River mill? - The focus is on transitioning from hardwood to softwood production, which is expected to enhance profitability, and there are ongoing government-supported projects to improve the mill's performance [46][47] Question: Any updates on the extension of your two RCFs? - Discussions with lenders are ongoing, and management expects to conclude these discussions before the end of Q2 [70][71]

Financial Data and Key Metrics Changes - The operating EBITDA for Q4 2025 was negative $20 million, an improvement of $8 million compared to Q3 2025, primarily due to stable production and the One Goal One Hundred program, despite market headwinds [3][4] - The company reported a consolidated net loss of $309 million for Q4 2025, or $4.61 per share, which included non-cash impairments totaling approximately $239 million [12][3] - Aggregate liquidity improved by over $54 million to $430 million, consisting of about $187 million in cash and $243 million in undrawn revolvers [11] Business Line Data and Key Metrics Changes - Both the pulp and solid wood segments reported negative quarterly EBITDA of $11 million in Q4 2025 [4] - Pulp sales volumes increased by 20,000 tons to 472,000 tons, while pulp production remained stable at 460,000 tons [7][19] - Lumber production decreased by about 6% to 109 million board feet, with sales volumes dropping to 103 million board feet, a decline of about 7% from Q3 2025 [9] Market Data and Key Metrics Changes - Softwood sales realizations decreased to $702 per ton, down from $728 per ton in Q3 2025, while North American NBSK list prices averaged $1,568 per ton, a reduction of about $132 [5][6] - The average net price for eucalyptus hardwood in Q4 was $540 per ton, an increase of $37 from Q3, while hardwood sales realizations remained flat at $528 per ton [6] - The average price gap between softwood and hardwood pulp in China narrowed to approximately $130 per ton [6] Company Strategy and Development Direction - The company is focusing on strategic initiatives to return the Peace River mill to profitability, including expanding softwood pulp production and exploring government support for energy generation [4][15] - The One Goal One Hundred program aims to improve profitability by $100 million by the end of 2026, with approximately $30 million in cost savings realized in 2025 [11][14] - The company is transitioning from hardwood to softwood production at the Peace River mill, aiming for a 50/50 split by the end of 2026 [47] Management's Comments on Operating Environment and Future Outlook - Management noted that ongoing market headwinds and trade uncertainties are impacting operational performance, but underlying performance has improved [13][14] - The company expects modest price improvements for NBSK and NBHK in Q1 2026, while trade uncertainty continues to affect supply-demand dynamics [19] - Management expressed confidence in the mass timber business as a growth engine, with expected revenues of over $120 million in 2026 [25][26] Other Important Information - The company plans to maintain a capital expenditure budget of $60 million to $80 million in 2026, focusing on maintenance and environmental projects [27] - The company is actively lobbying against policies that prioritize wood for biofuel over higher-value wood products [80][81] Q&A Session Summary Question: Can you say how much headroom you have under any of your maintenance covenants as of December 31? - The company is comfortable that it is well under the covenants at the end of the quarter, but expects them to tighten as the year progresses [30] Question: Any thoughts on asset recycling opportunities to expedite deleveraging? - The company is analyzing asset sales or restructuring but acknowledges that current market conditions are not favorable for claiming reasonable value [40] Question: Is there any thought to potentially closing the Peace River mill? - The company is focused on transitioning from hardwood to softwood production at the Peace River mill and is working on energy projects to support profitability [47][48] Question: What are the expectations around working capital for this year? - The company expects a modest cash outflow from working capital in 2026 [51] Question: How do you see the outlook for the market, particularly for softwood pulp? - Recent developments in supply disruptions may indicate potential upward pressure on prices for both hardwood and softwood [56][58]

Financial Data and Key Metrics Changes - The operating EBITDA for Q4 2025 was negative $20 million, an improvement of $8 million compared to Q3 2025, primarily due to stable production and the One Goal One Hundred program, despite market headwinds [3][4] - The consolidated net loss for Q4 2025 was $309 million, or $4.61 per share, compared to a net loss of $81 million, or $1.21 per share in Q3 2025 [13] - Total non-cash impairment charges for the quarter amounted to $260 million, or $3.22 per share, largely due to the ongoing weakness in the hardwood pulp market [3][4] Business Line Data and Key Metrics Changes - Both the pulp and solid wood segments reported negative quarterly EBITDA of $11 million in Q4 2025 [4] - Pulp sales volumes increased by 20,000 tons to 472,000 tons, while pulp production remained stable at 460,000 tons [7][20] - Lumber production decreased by about 6% to 109 million board feet, with sales volumes dropping to 103 million board feet, a decrease of about 7% from Q3 2025 [10][22] Market Data and Key Metrics Changes - Softwood sales realizations decreased to $702 per ton, down from $728 per ton in Q3 2025, while North American NBSK list prices averaged $1,568 per ton, a reduction of about $132 from Q3 [5][6] - The average net price for eucalyptus hardwood in Q4 was $540 per ton, an increase of $37 from Q3, while hardwood sales realizations remained flat at $528 per ton [6][20] - The average price gap between softwood and hardwood pulp in China narrowed to approximately $130 per ton [6] Company Strategy and Development Direction - The company is focusing on strategic initiatives to return the Peace River mill to profitability, including expanding softwood pulp production and exploring government support for energy generation [4][15] - The One Goal One Hundred program aims to improve profitability by $100 million by the end of 2026, with approximately $30 million in cost savings realized in 2025 [12][14] - The company is transitioning from hardwood to softwood production at the Peace River mill, aiming for a 50/50 split by the end of 2026 [50] Management's Comments on Operating Environment and Future Outlook - Management noted that ongoing market headwinds and trade uncertainties are impacting operational performance, but underlying performance has improved quarter-over-quarter [14][20] - The company expects modest price improvements for NBSK and NBHK in Q1 2026, while trade uncertainty continues to affect supply-demand dynamics [20][22] - Management expressed confidence in the mass timber business as a growth engine, with expected revenues of over $120 million in 2026 [25][27] Other Important Information - The company reported an improvement in aggregate liquidity of over $54 million to $430 million, attributed to working capital management and cost reduction activities [12] - Planned capital expenditures for 2026 are expected to be between $60 million and $80 million, focusing on maintenance and environmental projects [28] Q&A Session Summary Question: Can you say how much headroom that you have under any of your maintenance covenants as of December thirty-first? - Management indicated comfort with being well under the covenants at the end of the quarter, but expects them to tighten as the year progresses due to a weak outlook [32] Question: Any thoughts on asset recycling opportunities to expedite potential deleveraging of the balance sheet? - Management is analyzing asset sales or restructuring as part of their debt reduction plans, but noted that current market conditions are not favorable for claiming reasonable value for assets [43] Question: Is there any thought to potentially closing the Peace River mill? - Management clarified that they are focused on transitioning the mill from hardwood to softwood production, which is expected to enhance profitability [50] Question: Any updates on the extension of your two RCFs? - Management stated that discussions with lenders are ongoing and are expected to conclude before the end of Q2 2026 [75][78] Question: How do you see the outlook for the market, particularly regarding softwood pulp? - Management acknowledged significant supply disruptions and indicated potential upward pressure on prices for both hardwood and softwood due to recent developments in Indonesia [59][60]

Mercer International Inc. Transforming biomass into bioproducts for a more sustainable world Q4 2025 Earnings Call February 13th, 2026 Juan Carlos Bueno – President & CEO Richard Short – CFO, Executive VP & Secretary Forward-looking Statements The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements For more information regarding these risks and uncertainties, review Mercer's filings with the United States Securities and Exchange Commission Unless required ...

Financial Position - As of December 31, 2025, the company reported long-lived assets of $1,141.6 million, with depreciation and amortization of $160.0 million and impairment charges of $215.7 million recorded in 2025[470]. - The company’s deferred income tax liability stood at $58.3 million, with a net deferred income tax liability of $50.5 million after accounting for a $198.8 million valuation allowance[481]. - The company’s pension and other post-retirement benefit obligations totaled $93.0 million, with accumulated pension plan assets valued at $94.8 million as of December 31, 2025[476]. Currency Exchange Impact - The company experienced a 13% depreciation of the dollar against the euro and a 5% depreciation against the Canadian dollar since December 31, 2024[21]. - The average exchange rate for the euro in 2025 was $1.1306, while the average for the Canadian dollar was $0.7159[20]. Impairment and Valuation - The company recorded a 5% increase in estimated future cash flows would result in an estimated fair value increase of $11,000 for the Peace River mill's Asset Group[475]. - The company’s long-lived asset impairment testing is sensitive to key assumptions, with a 100 basis point increase in the discount rate potentially decreasing fair value by $9,000[475]. - Changes in market conditions or tax planning opportunities may affect the valuation allowance for deferred income tax assets, impacting future income tax benefits or expenses[485]. - The company evaluates the realizability of deferred income tax assets based on historical earnings and future profitability expectations[483]. Pension and Retirement Benefits - The company’s net periodic pension and other post-retirement benefit cost for 2025 was $0.7 million[476]. - The company uses a discount rate to determine the net present value of pension and other post-retirement benefit obligations[482]. Revenue Recognition - Revenue from long-term contracts is recognized over the contract term as work progresses, with cost of sales recognized as incurred[486]. - Revenue and cost estimates for significant long-term contract performance obligations are reviewed quarterly, with cumulative catch-up adjustments recognized in the current period[487]. - Estimating costs to complete long-term contracts involves judgment based on historical performance trends and economic projections[486]. Inventory Valuation - Inventories are valued at the lower of cost or net realizable value, requiring judgment based on current and expected selling prices[488]. - The company applies a weighted-average cost method for inventory valuation, impacting the financial statements based on net realizable value assessments[488]. Contingent Liabilities - The company assesses contingent liabilities related to lawsuits and claims, recording them when it becomes probable that payments will be required[490]. Accounting Standards - New accounting standards are referenced in the consolidated financial statements, indicating potential impacts on financial reporting[491]. Credit Ratings - Moody's downgraded the company's Senior Notes rating to Caa2 from B3 in November 2025, while S&P and Fitch also downgraded their ratings in late 2025[464].

EXHIBIT 99.1 For Immediate Release MERCER INTERNATIONAL INC. REPORTS FOURTH QUARTER 2025 AND YEAR END 2025 RESULTS Selected Highlights NEW YORK, NY, February 12, 2026 ‑ Mercer International Inc. (Nasdaq: MERC) today reported fourth quarter 2025 Operating EBITDA of negative $20.1 million compared to positive $99.2 million in the same quarter of 2024 and negative $28.1 million in the third quarter of 2025. In the fourth quarter of 2025, net loss was $308.7 million ($4.61 per share) compared to net income of $ ...

Core Insights - Mercer International Inc. reported a significant decline in financial performance for Q4 2025, with an Operating EBITDA of negative $20.1 million, compared to positive $99.2 million in Q4 2024 and negative $28.1 million in Q3 2025 [2][3][8] - The company experienced a net loss of $308.7 million ($4.61 per share) in Q4 2025, a stark contrast to a net income of $16.7 million ($0.25 per share) in Q4 2024, largely due to non-cash impairments totaling $238.7 million [3][8][34] - Despite the challenging environment, the company is focused on cost reduction and operational efficiency, aiming for $100 million in savings by the end of 2026 through its "One Goal One Hundred" program [6][8][34] Financial Performance - Total revenues for Q4 2025 decreased by approximately 8% to $449.5 million from $488.4 million in Q4 2024, primarily due to lower pulp sales realizations [14][34] - Costs and expenses in Q4 2025 increased by approximately 66% to $728.0 million from $438.0 million in Q4 2024, driven by negative foreign exchange impacts, maintenance spending, and higher fiber costs [15][34] - For the full year 2025, total revenues decreased by approximately 9% to $1.868 billion from $2.043 billion in 2024, attributed to lower pulp and manufactured products sales [34][37] Segment Performance - In the pulp segment, revenues decreased by approximately 11% to $334.3 million in Q4 2025 from $375.5 million in Q4 2024, with a significant drop in Operating EBITDA to negative $11.3 million from positive $106.1 million [18][22][34] - Lumber revenues in Q4 2025 decreased by approximately 6% to $54.9 million from $58.6 million in Q4 2024, despite a 12% increase in average sales realizations to $533 per Mfbm [28][34] - The solid wood segment's overall revenues remained relatively flat at $110.2 million in Q4 2025 compared to $111.6 million in Q4 2024, with higher revenues from manufactured products offsetting declines in lumber and biofuels [27][34] Market Conditions - Softwood pulp prices in Europe remained stable, while North American and Chinese prices decreased due to weak demand and economic uncertainty [7][19] - The company anticipates a modest increase in pulp prices in early 2026 due to stable demand and global supply constraints [7][9] - The U.S. imposed a 10% global tariff on imported lumber, significantly impacting Canadian producers, which has led to sawmill closures and tighter fiber supply [10][34] Operational Initiatives - The company is shifting its production mix towards softwood pulp and engaging with government stakeholders on energy and carbon capture opportunities to address challenges in the hardwood pulp market [4][8] - The "One Goal One Hundred" program has already realized approximately $30 million in cost savings and operational improvements during 2025, with continued focus on efficiency initiatives [6][8][34] - The mass timber order book has grown, with contracts secured for large-scale data center projects, indicating potential for future revenue growth [12][34]