UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File No.: 000-51826 MERCER INTERNATIONAL INC. (Exact name of Registrant as specified in its charter) Washington 47-0956945 (State or other j ...

Mercer International Inc. (NASDAQ:MERC) Q1 2023 Earnings Conference Call May 5, 2023 10:00 AM ET Company Participants David Ure - SVP, Finance and CFO Juan Carlos Bueno - President and CEO Conference Call Participants Sean Stewart - TD Securities Paul Quinn - RBC Capital Markets Hamir Patel - CIBC Capital Markets Richard Stevens - Momenta Operator Good morning and welcome to Mercer International’s First Quarter 2023 Earnings Conference Call. On the call today is Juan Carlos Bueno, President and Chief Execut ...

Washington, D.C. 20549 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the transition period from _______ to _______ Commission File No.: 000-51826 MERCER INTERNATIONAL INC. (Exact name of Registrant as specified in its charter) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Washington 47-0956945 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Indicate by chec ...

Mercer International Inc. (NASDAQ:MERC) Q4 2022 Earnings Conference Call February 17, 2023 10:00 AM ET Company Representatives Juan Carlos Bueno - President, Chief Executive Officer David Ure - Senior Vice President, Finance, Chief Financial Officer and Secretary Conference Call Participants Kasia Kopytek - TD Securities Paul Quinn - RBC Capital Markets Andrew Kuske - Credit Suisse Operator Good morning and welcome to Mercer International???s, Fourth Quarter 2022 Earnings Conference Call. On the call today ...

Production Capacity and Operations - The company has a consolidated annual production capacity of approximately 2.3 million ADMTs of kraft pulp, with 88% being NBSK pulp[24]. - The solid wood segment has an aggregate capacity of approximately 960 MMfbm of lumber and 140,000 m³ of cross-laminated timber (CLT)[31]. - The company operates four modern pulp mills, which provide advantages in manufacturing costs and efficiency compared to older competitors' mills[25]. - The Stendal mill has an annual production capacity of approximately 740,000 ADMTs and generates 148 MW of electricity[27]. - The Peace River mill has a production capacity of approximately 475,000 ADMTs and generates 70 MW of electricity[27]. - The Friesau mill has an annual production capacity of approximately 550 MMfbm of lumber and 13 MW of electrical generation[5]. - The Torgau facility has an annual production capacity of approximately 410 MMfbm of lumber, 17 million pallets, and can produce up to 230,000 metric tonnes of biofuels[5]. - The Mercer Mass Timber facility represents approximately 20% of North American CLT capacity with an annual production capacity of 140,000 m³[33]. Financial Performance - In 2022, pulp production was 1,878.6 thousand ADMTs, while pulp sales reached 1,917.7 thousand ADMTs, generating revenues of $1,686.37 million[26]. - The company produced and sold 751,720 MWh of surplus electricity in 2022, resulting in revenues of $167.52 million from electricity sales[29]. - In 2022, the company generated $12.23 million in revenue from chemicals produced as a by-product of pulp production[29]. - Lumber production for 2022 was 442.2 MMfbm, a slight decrease from 447.9 MMfbm in 2021[35]. - Lumber revenues for 2022 were $288,002,000, down from $293,166,000 in 2021[35]. - Pulp segment revenues for 2022 totaled $1,866.1 million, a 26% increase from $1,483.1 million in 2021[119]. - Solid wood segment revenues for 2022 reached $408.5 million, up from $313.5 million in 2021[121]. Capital Expenditures and Investments - Capital expenditures for 2022 amounted to $177.8 million, compared to $158.7 million in 2021[132]. - In 2023, total capital expenditures are expected to be between $175.0 million and $200.0 million[138]. - The Torgau facility was acquired for approximately $263.2 million on September 30, 2022[43]. - The company is investing in a pilot lignin plant at the Rosenthal mill to explore commercial opportunities for lignin[143]. - Total capital expenditures on environmental projects were approximately $4.8 million in 2022, $8.4 million in 2021, and are expected to be approximately $13.8 million in 2023[145]. Market and Pricing - The average European list price for NBSK pulp fluctuated between approximately $790 per ADMT in 2016 and $1,500 per ADMT in 2022[61]. - NBSK pulp list prices in Europe increased from $1,260/ADMT in 2021 to $1,425/ADMT in 2022, while North America saw an increase from $1,450/ADMT to $1,720/ADMT[63]. - In China, the net price for NBSK pulp rose from $760/ADMT in 2021 to $885/ADMT in 2022[63]. - In 2022, energy sales from German mills amounted to approximately $168.2 million, generating 694,124 MWh of electricity[87]. - Canadian mills sold approximately 167,178 MWh of renewable electricity in 2022, resulting in proceeds of approximately $25.0 million[89]. Fiber and Production Costs - Fiber costs represented about 50% of pulp cash production costs in 2022, while sawlogs accounted for approximately 75% of lumber cash production costs[91]. - In 2022, the German pulp mills consumed approximately 4.7 million m³ of fiber, with 58% being pulp logs and 42% sawmill wood chips[100]. - The Stendal mill's fiber consumption consisted of approximately 67% spruce, 31% pine, and 2% other species in 2022[101]. - The Friesau mill and Torgau facility utilize sawlogs and waste wood, achieving fiber utilization and logistics synergies[71]. - Wood fiber accounted for approximately 75% of cash costs for lumber production in 2022[104]. - In 2022, Canadian mills consumed about 4.3 million m³ of fiber, with 47% from sawmill wood chips and 53% from pulp logs[108]. Sustainability and Environmental Initiatives - The company is actively engaged in wood certification processes to ensure sustainable sourcing of fiber, which may impact operating costs if market demands change[97]. - The company has a commitment to sustainability, enhancing environmental tracking and reporting systems across all facilities[192]. - The company has validated its greenhouse gas reduction targets with the Science Based Target Initiative, aiming for a trajectory well below a 2 degrees Celsius increase[192]. - The New German Facility includes sustainability-linked terms, allowing for interest rate adjustments of up to 0.05% per annum based on sustainability targets[202]. - The focus on climate change has generated a substantial increase in demand for carbon neutral or green energy[159]. - The company is exploring initiatives to enhance the generation and sales of surplus green energy and chemical by-products[161]. Workforce and Corporate Strategy - The company employs approximately 3,320 people, with 2,315 in German operations, 910 in Canadian operations, and 60 in U.S. operations[172]. - The pulp segment employs approximately 1,806 people, while the solid wood segment employs approximately 1,429 people[172]. - The corporate strategy includes sustainable growth through acquisitions and targeted capital expenditures[44]. - The company recognizes the importance of maintaining competitive compensation and benefits packages to attract and retain talent[174]. - The company aims for women to comprise 30% of new hires by 2030, currently holding 30% of board positions and 25% of senior management roles[183]. - The company has partnered with a global management consulting firm to advance gender parity and diversity in its workforce[186]. Regulatory and Compliance - The Canadian federal government began phasing in a federal carbon tax pricing system as of January 1, 2023, affecting several provinces and territories[153]. - The company believes it has obtained all required environmental permits and is in material compliance with applicable environmental laws and regulations[149]. - As of December 31, 2022, all subsidiaries are restricted, affecting the company's credit rating and borrowing costs[196][435]. - The company is rated B+ by S&P and Ba3 by Moody's, with stable outlooks confirmed in December 2022[436]. Health and Safety - The company has implemented a "Road to Zero" health and safety program aimed at achieving zero workplace incidents[177].

Mercer International Inc. (NASDAQ:MERC) Q3 2022 Earnings Conference Call October 28, 2022 10:00 AM ET Company Participants Juan Carlos Beuno - President and Chief Executive Officer David Ure - Senior Vice President, Finance, Chief Financial Officer and Secretary Conference Call Participants Sean Stewart - TD securities Hamir Patel - CIBC Capital Markets Andrew Kuske - Credit Suisse Matthew McKellar - RBS Capital Markets Dennis Collins - Stifel Operator Hello and welcome to Mercer International???s Third Qua ...

Financial Data and Key Metrics Changes - The company achieved EBITDA of approximately $145 million in Q2 2022, down from roughly $155 million in Q1 2022, primarily due to planned maintenance downtime despite strong demand and higher prices for pulp and lumber [6][12] - Consolidated net income for the quarter was $71 million, or $1.08 per basic share, compared to net income of $89 million, or $1.35 per basic share in Q1 2022 [12] - Cash generated in Q2 totaled approximately $84 million, an increase from $65 million in Q1 2022, driven by lower accounts receivable balances [13][14] Business Line Data and Key Metrics Changes - The pulp segment contributed quarterly EBITDA of roughly $102 million, while the wood product segment achieved record quarterly EBITDA of $49 million [8] - Average pulp prices increased in all major markets, with the Q2 average NBSK net price in China at $1,008 per tonne, up $109 from Q1, and European list prices averaging $1,437 per tonne, up from $1,330 in Q1 [9] - Average lumber realizations increased in Q2, with the Random Lengths' benchmark for Western S-P-F 2 and Better averaging $866 per 1,000 board feet, down $408 from the previous quarter [10] Market Data and Key Metrics Changes - Demand for pulp remained stable in Q2, with supply constraints pushing prices higher [9] - In the U.S., lumber prices weakened significantly late in the quarter, with current benchmark prices at $670 per thousand board feet [11] - European electricity prices remained elevated, contributing to strong electricity sales, with prices around $200 per megawatt hour [12] Company Strategy and Development Direction - The company is focused on growth through the recent acquisition of Holzindustrie Torgau, which will diversify revenue streams and enhance production capacity [35] - An aggressive capital expenditure program is in place for 2022, targeting high-return projects that drive new product development and productivity improvements [26] - The company is investing in innovation, including a lignin development center and expansion projects at its Spokane mass timber plant [29][30] Management's Comments on Operating Environment and Future Outlook - Management noted inflationary pressures from rising costs of natural gas, chemicals, and fiber, but emphasized strong electricity revenues offsetting some of these costs [16] - The outlook for the lumber market remains positive despite recent volatility, with expectations of modest strengthening in U.S. prices [21][22] - Management expressed confidence in the company's ability to navigate challenges posed by natural gas shortages in Europe, highlighting operational flexibility [45][46] Other Important Information - The company has a strong liquidity position of approximately $771 million, supporting its acquisition and capital spending plans [14] - A quarterly dividend of $0.075 per share was approved for shareholders of record on September 28, 2022 [15] Q&A Session Summary Question: Capital spend planned for upgrades to the sawmill after Torgau acquisition? - The company will follow the existing CapEx plan set by Torgau and explore identified synergies [43] Question: Impact of natural gas shortages on industry-wide production? - Management acknowledged concerns over gas shortages but stated the company is well-equipped to handle them [45][46] Question: Production plan for HIT and expected focus on pallets versus commodity lumber? - The company aims to optimize production capabilities at HIT, balancing between pallets and higher-value lumber [48][49] Question: Timeline for Stendal mill recovery and business interruption insurance proceeds? - The Stendal mill is expected to reach 80% capacity by the end of the quarter, with insurance claims taking several months to settle [56][58] Question: Future business positioning and growth prospects? - Management sees a bright future with growth driven by the HIT acquisition and investments in Spokane [68][70] Question: Consideration of lower leverage for optimal cost of capital? - The company is targeting lower leverage levels and is aware of the importance of maintaining a balanced capital structure [89]

PART I. FINANCIAL INFORMATION [Financial Statements](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited interim statements show significant growth in revenue and net income, driven by strong sales realizations - The interim financial statements are prepared per U.S. GAAP and include all necessary adjustments for fair presentation[20](index=20&type=chunk) [Interim Consolidated Statements of Operations](index=3&type=section&id=Interim%20Consolidated%20Statements%20of%20Operations) Revenues and net income increased substantially in Q2 and H1 2022, driving significant growth in diluted EPS Q2 & H1 2022 vs 2021 Performance (in thousands USD, except per share data) | Metric | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $572,326 | $401,832 | $1,165,067 | $814,552 | | **Operating Income** | $114,031 | $51,836 | $236,382 | $102,865 | | **Net Income** | $71,372 | $21,415 | $160,269 | $27,348 | | **Diluted EPS** | $1.07 | $0.32 | $2.41 | $0.41 | | **Dividends Declared per Share** | $0.075 | $0.065 | $0.150 | $0.130 | [Interim Consolidated Balance Sheets](index=4&type=section&id=Interim%20Consolidated%20Balance%20Sheets) Total assets and shareholders' equity grew as of June 30, 2022, supported by an increase in cash and equivalents Balance Sheet Comparison (in thousands USD) | Account | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $1,169,114 | $1,064,305 | | Cash and cash equivalents | $419,861 | $345,610 | | **Total Assets** | $2,415,716 | $2,351,232 | | **Total Liabilities** | $1,663,594 | $1,657,208 | | Long-term debt | $1,245,906 | $1,237,545 | | **Total Shareholders' Equity** | $752,122 | $694,024 | [Interim Consolidated Statements of Cash Flows](index=6&type=section&id=Interim%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations more than doubled in H1 2022, driven by higher net income despite increased investing activities Cash Flow Summary - Six Months Ended June 30 (in thousands USD) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | **Net cash from operating activities** | $223,351 | $111,440 | | **Net cash used in investing activities** | ($148,344) | ($68,656) | | **Net cash from (used in) financing activities** | $5,189 | ($16,751) | | **Net increase in cash** | $74,251 | $23,436 | [Notes to the Interim Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Interim%20Consolidated%20Financial%20Statements) Notes detail segment performance, debt structure, and significant subsequent events including a mill fire and a major acquisition - The company operates two reportable segments: **Pulp and Wood Products**[61](index=61&type=chunk) - On July 1, 2022, a fire occurred in the woodyard of the Stendal mill, with damages expected to be **covered by insurance**[82](index=82&type=chunk) - On July 22, 2022, the company agreed to acquire Holzindustrie Torgau (HIT) for **€270 million**, funded with cash and credit facilities[82](index=82&type=chunk) [Management's Discussion and Analysis (MD&A)](index=22&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Strong Q2 results were driven by high sales realizations and a stronger USD, offsetting inflationary cost pressures - **Operating EBITDA**, a non-GAAP measure, increased 73% to **$145.1 million** in Q2 2022 from $83.8 million in Q2 2021[86](index=86&type=chunk)[101](index=101&type=chunk)[114](index=114&type=chunk) - The Q3 outlook anticipates **stable pulp prices**, attractive lumber prices, and strong German energy prices[95](index=95&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Consolidated revenue and operating income grew significantly, driven by higher pricing and strong performance in both segments Segment Operating Income (in thousands USD) | Segment | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | **Pulp** | $75,471 | $13,338 | $161,707 | $38,634 | | **Wood Products** | $45,853 | $42,314 | $86,332 | $70,291 | | **Total Operating Income** | $114,031 | $51,836 | $236,382 | $102,865 | - Costs and expenses in Q2 2022 increased by 31% to **$458.3 million**, driven by higher pulp sales volumes and inflationary pressure[108](index=108&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a robust liquidity position of approximately $771.1 million, sufficient for near-term capital needs Liquidity Position as of June 30, 2022 (in thousands USD) | Component | Amount | | :--- | :--- | | Cash and cash equivalents | $419,861 | | Term deposit | $75,000 | | Available under credit facilities | ~$276,200 | | **Total Aggregate Liquidity** | **~$771,100** | - Capital expenditures for the first six months of 2022 totaled **$80.3 million**, primarily for mill upgrades and optimization projects[161](index=161&type=chunk)[166](index=166&type=chunk) [Cyclical Nature of Business](index=37&type=section&id=Cyclical%20Nature%20of%20Business) Pulp and lumber businesses are highly cyclical, with profitability sensitive to commodity prices and foreign exchange rates - Pulp and lumber markets are **commodity-driven and cyclical**, with competition based primarily on price[192](index=192&type=chunk) - A **strengthening U.S. dollar is beneficial** to operating margins as most costs are in euros and Canadian dollars[200](index=200&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks from interest rate and foreign currency fluctuations, managed via internal policies - The company's primary market risks are **interest rate changes and foreign currency fluctuations** (USD vs EUR and CAD)[201](index=201&type=chunk) [Controls and Procedures](index=39&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's **disclosure controls and procedures are effective**[203](index=203&type=chunk) - There were **no material changes in internal control** over financial reporting during the quarter[205](index=205&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=40&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is subject to routine litigation not expected to have a material adverse effect on its business - The company is cooperating with a European Commission **cartel investigation** into the wood pulp sector which began in 2021[83](index=83&type=chunk) [Risk Factors](index=40&type=section&id=ITEM%201A.%20RISK%20FACTORS) Inflation is a key risk factor, as rising input costs could increase manufacturing expenses and reduce margins - A new material risk factor is **continued inflationary pressures** on production and transportation costs, which could adversely affect margins[208](index=208&type=chunk)[209](index=209&type=chunk) [Exhibits](index=41&type=section&id=ITEM%206.%20EXHIBITS) This section lists filed exhibits, including CEO/CFO certifications and iXBRL-formatted financial statements - Filed exhibits include **Section 302 and 906 certifications** by the CEO and CFO, and iXBRL data files for the financial statements[212](index=212&type=chunk)

Mercer International, Inc. (NASDAQ:MERC) Q1 2022 Earnings Conference Call April 29, 2022 10:00 AM ET Company Participants David Gandossi - President, CEO & Director David Ure - EVP, CFO & Secretary Conference Call Participants Hamir Patel - CIBC Capital Markets Andrew Kuske - Cr??dit Suisse Andrew Shapiro - Lawndale Capital Management Matthew McKellar - RBC Capital Markets Kasia Kopytek - TD Securities Operator Good morning, and welcome to Mercer International's Fourth Quarter 2021 Earnings Conference Call. ...

Financial Performance - Total revenues for the first quarter of 2022 increased by approximately 44% to a record $592.7 million from $412.7 million in the same quarter of 2021, primarily due to higher sales realizations, pulp sales volumes, and energy sales [97]. - Net income for the first quarter of 2022 was $88.9 million, or $1.35 per basic share, compared to net income of $5.9 million, or $0.09 per share, in the same quarter of 2021 [105]. - Operating EBITDA increased by approximately 88% to $154.5 million from $82.0 million in the same quarter of 2021, driven by higher sales realizations and pulp sales volumes [106]. - Cash provided by operating activities was $68.8 million in Q1 2022 compared to $30.3 million in Q1 2021 [128]. - Capital expenditures in Q1 2022 were $33.3 million, primarily related to upgrades at Canadian mills [129]. - As of March 31, 2022, cash and cash equivalents were $410.7 million, with total assets of $2,456.9 million [132]. Revenue Breakdown - Pulp segment revenues reached $485.9 million, up from $339.8 million, while wood products segment revenues increased to $101.0 million from $71.0 million [93]. - Energy and chemical revenues increased by 76% to $46.2 million from $26.3 million, primarily due to higher energy prices in Germany, which were more than double those in the same quarter of 2021 [98]. - Lumber revenues increased by approximately 37% to a record $92.4 million in Q1 2022 from $67.3 million in Q1 2021 [120]. - Average NBSK pulp sales realizations increased by approximately 22% to $812 per ADMT in Q1 2022 from approximately $668 per ADMT in Q1 2021 [114]. - Average lumber sales realizations increased by approximately 35% to $840 per Mfbm in Q1 2022 from approximately $622 per Mfbm in Q1 2021 [123]. Production and Sales Volumes - Pulp production increased by approximately 3% to 492,288 ADMTs, while pulp sales volumes rose to 505.1 ADMTs from 418.6 ADMTs in the same quarter of 2021 [110]. - Total pulp sales volumes increased by approximately 14% to 555,035 ADMTs in Q1 2022 from 487,678 ADMTs in Q1 2021 [112]. - The company anticipates continued upward pricing pressure on pulp prices due to current supply-demand dynamics, while lumber prices are expected to remain at historically strong levels [88]. Costs and Expenses - Costs and expenses increased by approximately 30% to $470.4 million, primarily due to higher per unit fiber costs and energy, freight, and chemical costs [99]. - Costs and expenses in Q1 2022 increased by approximately 27% to $399.7 million from $314.6 million in Q1 2021 [116]. - The company expects per unit fiber costs to increase in Q2 2022 due to continued strong demand [117]. Market Dynamics - The pulp and lumber markets are highly cyclical, with prices influenced by global economic conditions, industry capacity, and foreign exchange rates [159]. - The company is exposed to fluctuations in prices and demand for lumber, which could adversely impact its operations [154]. - Oversupply in the pulp and lumber markets can prolong weak pricing environments, affecting the company's operating results [160]. - The company's profitability is significantly affected by raw material costs, which are subject to cyclical fluctuations [165]. - The company operates in a highly cyclical industry, with revenues affected by global economic conditions, industry capacity, and foreign exchange rates, leading to potential price volatility [159]. Risks and Compliance - The ongoing COVID-19 pandemic poses risks that could materially affect the company's business and financial position [154]. - The company faces intense competition in the forest products industry, which could adversely affect its ability to compete [154]. - The company relies on third parties for transportation services, which could disrupt operations if issues arise [156]. - The company may incur substantial costs due to compliance with environmental regulations, which could impact financial results [156]. - The company faces risks related to compliance with trade and export laws, which could adversely impact operations [157]. - Changes in credit ratings could adversely affect the company's cost of financing and market price of its securities [156]. Currency and Pricing Fluctuations - Currency fluctuations can adversely affect the company's operating margins, as costs in Germany and Canada are incurred in euros and Canadian dollars, respectively, while sales are primarily in dollars [166]. - The dollar strengthened by approximately 2% against the euro and weakened by approximately 1% against the Canadian dollar since December 31, 2021 [146]. - The company's sales prices are net of customer discounts and rebates, which can affect overall revenue realization [163]. Sustainability and Standards - The company voluntarily complies with internationally recognized sustainable management standards, which are increasingly important to customers [162]. - The company recorded a net non-cash decrease of $10.5 million in the carrying value of net assets due to foreign currency fluctuations [145].