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]

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]

Macroeconomic Context - A weaker U.S. dollar is making international stocks more attractive as it increases the value of foreign earnings when converted to USD [1][2] - The Trump administration's One Big, Beautiful Bill raised the debt ceiling, leading to inflationary pressures on the dollar despite some spending cuts [2] - Analysts expect the Federal Reserve to begin cutting interest rates in the fall, which may further support international stock investments [2] Investment Opportunities - Mizuho Financial Group is gaining investor interest as Japanese stocks are seen as undervalued, particularly with the Bank of Japan cautiously raising interest rates [3][4] - Mizuho's stock has increased by about 20% in 2025, driven by improved loan profitability and earnings power due to a steepening yield curve [4] - United Microelectronics Corp. is positioned as a stable investment in the semiconductor sector, focusing on mature nodes needed for automotive and IoT applications, despite facing tariff concerns [7][8] - United Micro's stock is up 9.7% in 2025, with a stable net margin of 19%, although it has seen a decline of 5.6% over the last 12 months [8] - Suzano S.A., the world's largest pulp producer, is benefiting from recovering pulp prices and a joint venture with Kimberly-Clark, with its stock up nearly 5% in the last three months [11][12] - The Brazilian real's strengthening adds to the bullish case for Suzano, as its products are priced in dollars, indicating potential for growth [13]

Company Overview - Albany International's market capitalization is $2 billion[13] - The company's 2024 revenue reached $1.231 billion[13] - Adjusted EBITDA for 2024 was $232 million[13] - The company's net debt in 2024 was $203 million[13] Machine Clothing (MC) Segment - The MC segment holds approximately 37% of the global paper machine clothing market share[63, 65] - Machine Clothing adjusted EBITDA margin is approximately 37% including Heimbach acquisition[83] - The Heimbach Group acquisition broadens the manufacturing footprint and enhances the sales and service network[81] Albany Engineered Composites (AEC) Segment - The AEC segment is focused on technology differentiation and maximizing customer solutions[101] - The company is investing in next-generation technologies for future growth in the AEC segment[97] Financial Performance & Strategy - The company's strategy for continued growth includes serving vital industries and solid execution[9] - The company's capital deployment is primarily focused on organic growth[37]

Investment Rating - The report does not explicitly state an investment rating for the pulp and paper industry [1]. Core Insights - Chinese pulp prices for May decreased by 13% month-over-month (m/m) for hardwood and 11% m/m for softwood, with hardwood resale prices declining by 5% and softwood resale prices decreasing by 2% m/m [5]. - In Europe, pulp prices remained stable, with hardwood prices flat m/m and softwood prices increasing by 1% m/m [5]. - China's paper prices showed mixed results, with most grades experiencing flat to low single-digit declines m/m, while containerboard prices slightly increased [5]. - Compared to their 5-year historical averages, paper margins are 38% below for ivoryboard and 15% below for tissue, while 5% above for uncoated woodfree (UWF) and 13% above for coated woodfree (CWF) [5]. - China’s pulp port inventories increased by 3% m/m to 2.2 million tons (Mt), exceeding the historical average of 1.8 Mt [5]. - European port inventories declined by 13% m/m in April, reaching 1.3 Mt, aligning with the historical average [5]. Summary by Region Global - The report includes a comprehensive overview of global pulp and paper prices, production, and consumption trends [6]. China - Pulp prices in China for hardwood are at $517 per ton, down 13% m/m, while softwood prices are at $712 per ton, down 11% m/m [7]. - Paper prices in China show a range of changes, with coated woodfree at 5,475 CNY per ton, down 4% m/m [7]. Europe - Hardwood pulp prices in Europe are stable at $1,194 per ton, while softwood prices increased to $1,597 per ton, up 1% m/m [7]. - Containerboard prices in Europe have risen by 1% to 3% m/m [5]. USA - In the US, coated woodfree prices are at $1,515 per ton, stable m/m, while uncoated woodfree prices are at $1,610 per ton, also stable m/m [7]. Latin America - The report highlights trends in containerboard shipments in Brazil, indicating a year-over-year growth [70].

Group 1: Suzano (SUZ) - Suzano is a producer of eucalyptus pulp and paper, holding a Zacks Rank 1 (Strong Buy) [1] - The Zacks Consensus Estimate for its current year earnings has increased by 7.8% over the last 60 days [1] - The company has a PEG ratio of 0.08 compared to the industry average of 0.32, and possesses a Growth Score of A [1] Group 2: Great Lakes Dredge & Dock (GLDD) - Great Lakes Dredge & Dock is the largest provider of dredging services in the US, also holding a Zacks Rank 1 [2] - The Zacks Consensus Estimate for its current year earnings has increased by 34.8% over the last 60 days [2] - The company has a PEG ratio of 0.96 compared to the industry average of 1.49, and possesses a Growth Score of A [2] Group 3: The ODP Corporation (ODP) - The ODP Corporation provides business services, products, and digital workplace technology solutions, also holding a Zacks Rank 1 [3] - The Zacks Consensus Estimate for its current year earnings has increased by 9% over the last 60 days [3] - The company has a PEG ratio of 0.44 compared to the industry average of 3.48, and possesses a Growth Score of B [3]

Financial Performance - Mercer's Q1 2025 Operating EBITDA decreased to $47 million, a $52 million decrease compared to $99 million in Q4 2024[6] - The Pulp segment's EBITDA decreased by $56 million, from $106 million in Q4 2024 to $50 million in Q1 2025[6] - Net loss was $22 million in Q1 2025, compared to a net income of $17 million in Q4 2024[27] - Cash flow from operating activities decreased by $74 million, from $71 million in Q4 2024 to -$3 million in Q1 2025[27] Operational Factors - Planned maintenance downtime at the Celgar mill had an estimated EBITDA impact of approximately $30 million[9] - Total planned downtime for 2025 is expected to be 79 days, compared to 57 days in 2024[57] - Q1 sales volume increased from 452,000 tonnes to 478,000 tonnes[15] Market Dynamics and Outlook - The company is targeting $100 million in cost savings by the end of 2026 compared to 2024[31] - Fiber costs are expected to increase by approximately 10% for the solid wood segment in Q2 2025[42] - The company is monitoring potential tariff impacts on pulp and lumber imports into the U S, with average annual sales of approximately 200,000 tonnes of pulp and approximately 200 million fbm of lumber into the U S[30] - Mass timber order file suggests a weaker Q2 and Q3 for 2025, with improvement anticipated to start in Q4[46]

Financial Data and Key Metrics Changes - The company's EBITDA for Q1 was $47 million, a significant decrease from $99 million in Q4, primarily due to 22 days of planned maintenance downtime at the Celgar mill, which adversely impacted EBITDA by approximately $30 million [3][11] - A consolidated net loss of $22 million was reported for Q1, translating to a loss of $0.33 per share, compared to a net income of $17 million or $0.25 per share in Q4 [11] - Cash consumption in Q1 was about $3 million, a decrease from $54 million in Q4, with a net working capital increase of roughly $23 million due to seasonal movements [11][12] Business Segment Data and Key Metrics Changes - The pulp segment contributed an EBITDA of $50 million in Q1, while the solid wood segment's EBITDA was nearly breakeven [4] - Pulp sales volumes increased by 26,000 tonnes to 478,000 tonnes in Q1, attributed to the timing of sales despite the planned downtime [6] - Lumber production reached a near-record 128 million board feet in Q1, up 12% from Q4, with sales volumes also hitting a new record at 131 million board feet, a 6% increase from Q4 [8][9] Market Data and Key Metrics Changes - MBSK prices increased in key markets, with the European average price rising to $15.50 per ton, an increase of $50 from Q4, and North American prices averaging $17.53 per ton, up $66 from Q4 [4][5] - In China, the MBSK net price was $793 per tonne, an increase of $26 from Q4, while hardwood sales realizations remained flat due to offsetting price changes in North America [5] - The North American MBHT average price decreased to $12.68 per ton, down $30 from Q4 [6] Company Strategy and Development Direction - The company is targeting a $100 million improvement in operational efficiency and cost savings by the end of 2026, alongside a $20 million reduction in inventories and capital expenditures in 2025 [17] - The company aims to maximize mill operating rates and generate cash to reduce debt, with a focus on improving reliability across all businesses [17][24] - The mass timber operations are expected to grow, with a current order file of about $24 million, and plans to ramp up production in early 2026 [28][29] Management's Comments on Operating Environment and Future Outlook - Management noted that the weakening U.S. dollar could enhance purchasing power for U.S.-sourced fiber, while also indicating potential modest fiber cost inflation and lower energy sales prices in Q2 [19][20] - The company is closely monitoring trade policy developments and has contingency plans to mitigate potential tariff impacts [14][17] - Despite global economic uncertainty, management remains optimistic about the long-term demand for softwood pulp and the potential for price differentials between softwood and hardwood pulp to widen [22][23] Other Important Information - The company reported a liquidity position of $471 million at the end of Q1, including $182 million in cash and $289 million in undrawn revolvers [12] - A quarterly dividend of $0.75 per share was approved for shareholders of record on June 26, with payment scheduled for July 3, 2025 [12] Q&A Session Summary Question: Can you elaborate on the secondary effects related to tariffs and pricing? - Management explained that secondary effects include the weakening U.S. dollar impacting costs and a slowdown in demand in China, leading to cautious inventory management [41][42][44] Question: What is the outlook for pulp prices in Q2? - Management anticipates more positive than negative impacts on pulp prices in Q2 compared to Q1, despite some recent softness in lumber prices [45][46] Question: Can you provide details on the cost savings objectives? - The company has identified various cost reduction opportunities across its operations, with expectations to achieve $40 to $50 million in savings by 2025 [50][51] Question: How will the lumber markets evolve if Section 232 tariffs are introduced? - Management indicated that Canadian lumber would become less competitive, potentially benefiting their products from Germany, which would be more favorable in the U.S. market [63][64] Question: What is the impact of Russian fiber on the softwood futures market? - Management noted that Russian fiber significantly influences the market, affecting pricing dynamics and creating an imbalance in supply [81][82] Question: Are there any changes in order patterns from pulp customers? - Management reported no significant changes in order patterns in Europe or North America, although there is some caution in China [108][110]

Financial Data and Key Metrics Changes - The company's EBITDA for Q1 2025 was $47 million, a significant decrease from $99 million in Q4 2024, primarily due to 22 days of planned maintenance downtime at the Celgar mill, which adversely impacted EBITDA by approximately $30 million [3][11] - The consolidated net loss for Q1 2025 was $22 million, or $0.33 per share, compared to a net income of $17 million, or $0.25 per share in Q4 2024 [11] - Cash consumption in Q1 was about $3 million, a decrease from $54 million in Q4 2024, with a net working capital increase of roughly $23 million due to seasonal movements [11][12] Business Segment Data and Key Metrics Changes - The pulp segment contributed an EBITDA of $50 million in Q1 2025, while the solid wood segment's EBITDA was essentially breakeven [4] - Pulp sales volumes increased by 26,000 tonnes to 478,000 tonnes in Q1, attributed to the timing of sales despite the planned downtime [6] - Lumber production reached a near-record 128 million board feet in Q1, up 12% from Q4, with sales volumes also hitting a new record at 131 million board feet, up about 6% from Q4 [8][9] Market Data and Key Metrics Changes - MBSK prices in Europe averaged $15.50 per ton in Q1, an increase of $50 from Q4, while North American MBSK prices averaged $17.53 per ton, up $66 from Q4 [4][5] - In China, the MBSK net price was $793 per tonne, an increase of $26 from Q4, while hardwood sales realizations were flat due to offsetting price changes in North America [5] - The North American MBHT average price was $12.68, down $30 from Q4, indicating mixed pricing trends across different markets [6] Company Strategy and Development Direction - The company is targeting a $100 million improvement in operational efficiency and cost savings by the end of 2026 compared to 2024, alongside a $20 million reduction in inventories and capital expenditures in 2025 [17] - The company is focusing on maximizing mill operating rates and generating cash to reduce debt, with a strong emphasis on improving asset reliability across all businesses [24][25] - The mass timber operations are expected to grow, with the company confident in its ability to capture market growth due to its significant production capacity and broad product offerings [30][37] Management's Comments on Operating Environment and Future Outlook - Management noted that the weakening U.S. dollar could enhance purchasing power for U.S.-sourced fiber, while also indicating potential modest fiber cost inflation and lower energy sales prices in Q2 [20][21] - The company anticipates stable demand for softwood pulp in the mid-term, with upward pricing pressure expected due to reduced supply [22][23] - Management expressed concerns about global economic uncertainty impacting buying patterns and pricing, particularly in China, but remains optimistic about the long-term outlook for softwood pulp [20][23] Other Important Information - The company plans for major maintenance shutdowns throughout the year, with a total of 79 days of planned downtime compared to 57 in 2024 [34] - A quarterly dividend of $0.75 per share has been approved for shareholders of record on June 26, 2025 [12] - The company is committed to its 2030 carbon reduction targets and believes its products will play a significant role in addressing climate change [38][39] Q&A Session Summary Question: Can you elaborate on the secondary effects related to tariffs? - Management explained that secondary effects include the weakening U.S. dollar impacting costs and a slowdown in demand in China, which has put pressure on prices, particularly hardwood [44] Question: What is the outlook for pulp prices in Q2? - Management indicated that they expect more positive than negative impacts on pulp prices in Q2 compared to Q1, despite some recent softness in lumber prices [47] Question: Can you provide context on the $100 million cost savings objectives? - Management detailed that the cost reduction program targets various operational aspects, with expectations to capture $40 to $50 million in savings by 2025 [52] Question: How would meaningful Section 232 tariffs impact lumber markets? - Management noted that Canadian lumber would become less competitive due to countervailing duties, which would favor their products from Germany [64] Question: Are there any changes in order patterns from pulp customers? - Management reported no significant changes in order patterns in Europe or North America, although there is some caution in China [106]