Mercer(MERC)2021-10-28 21:01Financial Performance - Total revenues for Q3 2021 increased by approximately 41% to 333.2 million in Q3 2020, primarily due to higher pulp and lumber sales realizations [100]. - Operating income for Q3 2021 reached a record 13.7 million in Q3 2020, driven by higher sales realizations [103]. - Net income for Q3 2021 was 1.05 per basic share, compared to 0.11 per share, in Q3 2020 [106]. - Operating EBITDA for Q3 2021 increased to 45.6 million in Q3 2020, reflecting higher sales realizations [106]. - Total revenues for the nine months ended September 30, 2021 increased by approximately 25% to 1,024.9 million in the same period of 2020 [127]. - Net income for the nine months ended September 30, 2021 was 1.46 per share, compared to a net loss of 0.06 per share, in the same period of 2020 [135]. Revenue Breakdown - Pulp segment revenues for Q3 2021 were 274.9 million in Q3 2020, while wood products segment revenues increased to 57.1 million [96]. - Pulp revenues increased by approximately 48% to 253.1 million in Q3 2020 due to higher sales realizations [108]. - Lumber revenues increased by approximately 26% to 53.6 million in Q3 2020, attributed to higher sales realizations [120]. - Total pulp revenues for the nine months ended September 30, 2021 increased by approximately 22% to 808.9 million in the same period of 2020 [137]. - Lumber revenues increased by approximately 67% to 132.2 million in the same period of 2020, primarily due to a higher realized sales price [148]. Production and Costs - Pulp production for Q3 2021 was 443,000 ADMTs, an increase from 400,200 ADMTs in Q3 2020 [98]. - Total pulp production increased by approximately 4% to 500,866 ADMTs in Q3 2021 from 479,993 ADMTs in Q3 2020, despite 44 days of maintenance downtime [111]. - Costs and expenses in Q3 2021 increased by approximately 11% to 319.4 million in Q3 2020, mainly due to higher energy and maintenance costs [101]. - Production costs are significantly affected by the availability and cost of raw materials, with higher fiber prices potentially impacting profit margins if price increases cannot be passed to customers [198]. Market Conditions - The company expects steady NBSK pulp demand in Europe but a weakening market in China for Q4 2021 [93]. - The business is highly cyclical, with revenues affected by supply and demand imbalances in the pulp and lumber markets, which are sensitive to global economic conditions [191]. - Demand for pulp and lumber is closely tied to global macro-economic conditions and overall business activity, making it sensitive to economic cycles [194]. Financial Position and Liquidity - Cash provided by operating activities was 22.8 million in the same period of 2020 [157]. - As of September 30, 2021, total assets increased to 2.13 billion as of December 31, 2020 [161]. - The company had cash and cash equivalents of 308.2 million available under revolving credit facilities, providing aggregate liquidity of about 150 million, focusing on projects that deliver high returns and support ESG objectives [167]. - Capital expenditures in the nine months ended September 30, 2021, were $125.7 million, primarily for the recovery boiler rebuild and capacity expansion projects [158]. Currency and Economic Factors - The dollar strengthened by approximately 6% against the euro and was flat against the Canadian dollar since December 31, 2020 [178]. - The company’s operations in Germany and Canada incur costs in euros and Canadian dollars, respectively, while most sales are quoted in dollars, leading to potential adverse effects on operating margins from currency fluctuations [199].