on 23-Mar-2026 23 March 2026 Global Semiconductors and Semiconductor Capital Equipment Global Semiconductors and Semicap: Do you believe in Elon? Stacy A. Rasgon, Ph.D. +1 213 559 5917 stacy.rasgon@bernsteinsg.com Mark Li +852 2123 2645 mark.li@bernsteinsg.com David Dai, CFA +852 2918 5704 david.dai@bernsteinsg.com Qingyuan Lin, Ph.D. +852 2123 2654 qingyuan.lin@bernsteinsg.com Arpad von Nemes +1 917 344 8461 arpad.vonnemes@bernsteinsg.com Yipin Cai, CFA +852 2123 2669 yipin.cai@bernsteinsg.com Juho Hwang + ...

Core Insights - Mercer International (MERC) reported a significant Q4 loss with an EPS of -$4.61, missing the consensus estimate of -$0.83, primarily due to a $238.7 million impairment on its Peace River hardwood pulp mill [5][6][7] - International Paper (IP) achieved an adjusted EBITDA of $859 million, a 28% sequential increase, while divesting its Global Cellulose Fibers business for $1.5 billion, aiming to transition into a pure-play global packaging company [5][9][10] Company Performance - Mercer International's revenue for Q4 was $449.5 million, with shareholders' equity plummeting to $68 million, down 84% year-over-year, and total liabilities at $1.97 billion against total assets of $2.04 billion [7][5] - International Paper's revenue for Q3 was $6.22 billion, with adjusted EBITDA of $859 million and operating cash flow of $605 million, indicating a stronger financial position despite facing restructuring charges [6][7] Strategic Direction - Mercer is facing existential pressure due to a downturn in the commodity pulp cycle, with CEO Juan Carlos Bueno indicating that the company is considering all options regarding its Peace River mill asset [2][8] - International Paper is strategically exiting low-margin pulp assets to focus on building a diversified packaging business, with CEO Andy Silvernail emphasizing the commitment to their transformation plan [2][9] Market Position and Outlook - Mercer trades at $1.46, down approximately 76% over the past year, while International Paper trades at $37.54, down about 24% in the same period, highlighting the contrasting financial health and strategic positioning of the two companies [13] - The future for Mercer hinges on the recovery of pulp prices and the success of its cost-saving program, while International Paper's focus on packaging may provide it with better pricing leverage and market stability [11][12]

Group 1 - The core issue in modern packaging design is the prioritization of machine efficiency over human usability, leading to challenges for end users [1][2][5] - Automation has significantly influenced packaging operations, requiring precision and uniformity, which often results in designs that are rigid and not user-friendly [3][4] - Packaging designed for machines can lead to hidden costs and risks, as it may not consider the needs of warehouse staff, retailers, and consumers [2][6] Group 2 - The machine-first approach to packaging limits flexibility, making it difficult to adapt to changes in production volumes or market demands [6] - Human-centered design is often sacrificed for mechanical efficiency, resulting in packaging that may be difficult to handle and open [7][8] - Poor ergonomic packaging can lead to increased workplace injuries, higher absenteeism, and negative customer experiences, ultimately affecting profitability [8]

Core Insights - Supremex experienced a significant 77.6% decrease in net earnings for Q4 2025, reporting $1.3 million compared to $5.8 million in Q4 2024 [1] - Quarterly revenue increased by 5.6% year-on-year, reaching $72.9 million [1] - The envelope segment generated $48.9 million in revenue, slightly up from $48.8 million a year earlier, but its contribution to total revenue decreased from 70.6% to 67.1% [1][2] Revenue Breakdown - The envelope segment accounted for 67.1% of total revenue, down from 70.6% [2] - The volume of units sold increased by 5.3%, driven by contributions from Enveloppe Laurentide and Elite Envelope, as well as new contracts and market share gains in the US [2] - Revenue from packaging and specialty products rose to $24 million, an 18.3% increase from $20.3 million in the previous year, making up 32.9% of total revenue compared to 29.4% previously [2] Business Performance - The increase in packaging revenue was attributed to higher folding carton sales, new business wins, and growth with international consumer packaged goods clients, along with the acquisition of Trans-Graphique in July 2025 [3] - Total debt was reduced to $4.1 million at the end of December 2025, down from $43.1 million a year earlier, due to repayments supported by cash flow and proceeds from a sale and leaseback transaction [3] - On February 18, 2026, Supremex extended the maturity of its secured revolving credit facility to July 2028 [3] Annual Overview - For the full year 2025, Supremex reported net earnings of $12 million, reversing the loss from the previous year [4] - Annual revenue was $274.8 million, representing a 2.2% decline from the previous year [4] - The CEO noted sequential revenue and Adjusted EBITDA margin growth for both businesses in Q4 2025 compared to Q3 2025 [4] Market Conditions - The company indicated that the significant headwinds from Canada Post labor disruptions in the first three quarters had diminished, allowing for continued penetration into the US market and improved operational efficiency [5] - Strong performance in folding carton activities and sustained momentum in e-commerce packaging solutions contributed to nearly 20% revenue growth, both sequentially and year-over-year in the packaging and specialty products segment [6]

Core Insights - The company reported record fourth quarter adjusted EBITDA, driven by a significant recovery in recycling economics and strong operational execution at the Muscle Shoals facility [1] Segment Performance - The A&T segment experienced a 41% increase in TID shipments, supported by U.S. onshoring trends and the full recovery of the Valais plant after previous flood disruptions [1] - PARP achieved record quarterly results due to healthy packaging demand across North America and Europe, while automotive shipments stabilized despite regional supply chain interruptions [1] Market Dynamics - Management noted a net positive impact in North American automotive from capturing market share during a competitor's facility outage, despite facing production constraints on certain platforms [1] Financial Strategy - The company successfully reduced leverage to 2.5x by year-end 2025, reaching the upper end of its target range through disciplined capital allocation and share repurchases [1] Strategic Focus - The company maintains a strategic focus on high-value aerospace products, with demand for space and military applications offsetting stable but inventory-heavy commercial OEM segments [1]

Financial Data and Key Metrics Changes - Constellium achieved adjusted EBITDA of $83 million in Q4 2025, a 43% increase compared to Q4 2024, with full-year adjusted EBITDA of $339 million, up 16% from 2024 [2][3] - Free cash flow for 2025 was $178 million, significantly improved from 2024, with expectations for 2026 to exceed $200 million [10][11] - Net debt at the end of Q4 2025 was $1.8 billion, an increase of approximately $50 million from the end of 2024, with leverage reduced to 2.5 times [12][13] Business Segment Performance Changes - A&T segment adjusted EBITDA was $83 million in Q4 2025, driven by a 41% increase in TID shipments, while full-year adjusted EBITDA was $339 million [2][3] - PARP segment achieved a record adjusted EBITDA of $136 million in Q4 2025, a 143% increase year-over-year, with full-year adjusted EBITDA of $353 million, up 46% from 2024 [4][5] - AS&I segment adjusted EBITDA was $5 million in Q4 2025, a slight increase from the previous year, with full-year adjusted EBITDA of $72 million, down 3% from 2024 [6][7] Market Data and Key Metrics Changes - Demand in aerospace remains strong, with commercial aircraft backlogs at record levels, while automotive demand in North America is stable but weak in Europe [15][19] - Packaging demand is healthy in both North America and Europe, with expectations for low to mid-single-digit growth in the long term [17][18] - Industrial market conditions in North America and Europe stabilized in the second half of 2025, but specialty markets in Europe remain weak [21][22] Company Strategy and Development Direction - The company announced a new group-wide excellence program, Vision 2028, aimed at operational efficiencies and cost reduction [10][46] - Investment in additional capacities, particularly in aerospace, is ongoing, with a new Airware cast house expected to start up by the end of 2025 [16][45] - The company remains focused on strong cost control, free cash flow generation, and maintaining a right-sized cost structure [10][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals driving commercial aerospace demand, including growing passenger traffic and demand for fuel-efficient aircraft [15][16] - The company anticipates continued benefits from favorable recycling economics in 2026, particularly in the first half [11][32] - Inflationary pressures are ongoing, but the company is focused on managing costs effectively in a fluid market environment [10][46] Other Important Information - The company repurchased 8.9 million shares for $115 million in 2025, with approximately $106 million remaining on the share repurchase program [11][12] - Holdings and corporate expenses for 2025 were $44 million, up $11 million from the previous year, primarily due to higher labor costs [7][8] Q&A Session Summary Question: Can you let us know how much of a benefit for scrap spreads is embedded in the 2026 guide? - Management expects similar benefits from scrap spreads in 2026 as seen in Q4 2025, with a net impact of $40 million from favorable conditions [27][32] Question: What are your latest thoughts on the aerospace recovery? - Aerospace demand is steady, with military jets and space expected to grow positively, while the new Airware cast house will enhance capabilities [44][45] Question: Any thoughts on potential tariff relief on downstream products? - Management does not foresee any impact from potential tariff relief, believing tariffs are currently a net positive for the company [49][50] Question: Can you elaborate on the cadence expected for EBITDA and free cash flow? - Q1 2026 is expected to be stronger than Q4 2025 due to favorable recycling economics and benefits from automotive supply disruptions [55][56] Question: What are the assumptions on Midwest Premium and scrap spread baked into your guidance? - Management indicated that the first half of 2026 has stronger assumptions for Midwest Premium and scrap spreads compared to the second half [62][66]

Core Insights - Transport damage remains a significant issue for businesses across various sectors, leading to increased costs and environmental impact [1] - The ability of packaging to protect products during transit has become crucial for operational performance, especially as supply chains become more complex and e-commerce grows [2] Packaging Design Challenges - Many packaging designs are based on idealized conditions, failing to account for the harsh realities of transport, such as vibration, compression, and humidity changes [3] - Optimizing packaging primarily for material reduction or aesthetic appeal can compromise protective performance, resulting in packaging that fails under real-world conditions [4] Testing and Validation Issues - Standardized testing protocols do not always reflect the complexities of modern logistics, leading to packaging designs that may not be suitable for current supply chain demands [5] - The gap between packaging design and actual transport conditions manifests as damaged stock and increased returns, affecting customer relationships [6] Supply Chain Complexity - Global supply chains have become longer and more fragmented, increasing the risk of transport damage as products pass through multiple handlers [7] - Packaging that performs well in one segment of the supply chain may fail in another, particularly during long-distance shipping and last-mile delivery [8]

Financial Data and Key Metrics Changes - The company reported a strong operational cash flow and free cash flow in Q4 2025, even amidst a lower price cycle, indicating resilience and competitiveness in its business model [5][6] - The cash cost reached BRL 778 per ton in Q4 2025, a 3% reduction from Q3 2025, marking the lowest cash cost performance since Q4 2021 [23][24] - The company generated a positive free cash flow of $400 million in Q4 2025, reducing net debt to $12.6 billion and decreasing leverage to 3.2 times [26] Business Line Data and Key Metrics Changes - The pulp business unit achieved record shipment volumes in Q4 2025, driven by operational excellence in the supply chain [4] - The paper and packaging business unit saw strong volumes, particularly in the U.S., with a 21% year-over-year increase in packaging prices despite declining paper prices in export markets [8][10] - The company ceased operations at its Rio Verde Mill, which had the highest cash cost in its portfolio, expecting a positive impact on 2026 results by reallocating production to more competitive mills [12] Market Data and Key Metrics Changes - In Brazil, print and write paper demand increased by 1% in the first two months of Q4 2025, while paperboard demand grew by 2% [9] - The U.S. market experienced stable shipments in Q4 2025, but production increased by 2% due to new capacity, leading to pressure on operating rates [10] - In China, paper and board production increased by 17% in Q4 2025 compared to Q4 2024, contributing to higher demand for hardwood pulp [13] Company Strategy and Development Direction - The company views 2025 as an inflection point for total operational disbursement (TOD), aiming to improve competitiveness and cash generation capabilities [5][29] - A comprehensive multi-year program is being implemented to enhance competitiveness, focusing on reducing total operational disbursement [24] - The company is strategically positioning inventories for Q2 2026, anticipating maintenance downtimes that will reduce output [20] Management's Comments on Operating Environment and Future Outlook - Management highlighted a more constrictive business environment for 2026 due to changes in supply and demand dynamics, particularly in the pulp market [29] - The delay of new market pulp capacity in Indonesia and the revocation of forestry licenses are expected to tighten supply, positively impacting market dynamics [71][73] - The company anticipates a gradual decline in cash costs throughout 2026, despite challenges in the first quarter due to planned maintenance [24][60] Other Important Information - The company renewed its revolving credit facility, increasing the line from $1.3 billion to $1.8 billion while reducing costs [26] - A new buyback program was announced to acquire up to 40 million shares over the next 18 months, following a previous buyback of 15 million shares [28] Q&A Session Summary Question: Insights on pulp market dynamics in China - Management indicated that despite new pulp capacity, the net effect on supply is neutral due to lower operating rates and shutdowns, leading to a positive import trend for hardwood pulp [34][35] Question: Future CAPEX trends - Management acknowledged potential for lower CAPEX in 2026 due to non-recurring items but refrained from providing specific guidance [33][37] Question: Buyback execution strategy - The company remains focused on deleveraging but is opportunistic with buybacks, considering various market factors [41][42] Question: Potential divestments and their impact on deleveraging - Management noted that divestments are not a primary strategy for deleveraging, which will primarily come from operational improvements [43][44] Question: Paper prices in China and their impact on pulp prices - Management confirmed that while paper prices are a factor, pulp prices generally lead the market, and they expect a recovery in paper prices [48][50] Question: U.S. packaging market outlook - The company expressed confidence in its U.S. packaging business, citing stable demand and long-term contracts that insulate it from market volatility [53][55]

Financial Data and Key Metrics Changes - The company reported a strong operational cash flow and free cash flow in Q4 2025, demonstrating resilience despite lower price cycles [5][6] - EBITDA for Q4 2025 reached $4.8 billion, an 8% increase quarter-over-quarter, supported by higher volumes and better prices in US dollar terms [15][21] - Cash costs were reported at BRL 778 per ton, marking a 3% reduction from Q3 2025, driven by lower input costs and operational stability [21][22] Business Line Data and Key Metrics Changes - The pulp business unit achieved record shipment volumes in Q4 2025, with a notable price recovery in all markets, particularly in China and Asia [4][12] - The paper and packaging business unit also delivered strong volumes, with a 21% year-over-year increase in the U.S. market, despite declining paper prices in export markets [7][10] - The company ceased operations at its Rio Verde Mill, which had the highest cash cost in its portfolio, expecting a positive impact on 2026 results [11] Market Data and Key Metrics Changes - In Brazil, print and write demand increased by 1% in the first two months of Q4 compared to the same period last year, while paperboard demand grew by 2% [8][9] - The U.S. market saw stable SBS shipments in Q4, but production increased by 2%, leading to pressure on operating rates [9] - International markets remained weak, with declining demand and oversupply, particularly in Europe [8][10] Company Strategy and Development Direction - The company aims to improve competitiveness through a multi-year program focused on reducing total operational disbursement [22][23] - The management highlighted the importance of maintaining liquidity and reducing net debt, targeting a reduction to $11 billion [40] - The joint venture with KC is progressing as planned, with expectations for closing in mid-2026 [27] Management's Comments on Operating Environment and Future Outlook - Management noted a more constrictive business environment for 2026 due to changes in supply and demand dynamics, particularly in the pulp market [27][68] - The delay of new market pulp capacity and revocation of forestry licenses in Indonesia are expected to tighten supply further [68] - The company anticipates a gradual decline in cash costs over the course of 2026, despite challenges in the first half of the year [22][59] Other Important Information - The company generated positive free cash flow of $400 million in Q4 2025, contributing to a reduction in net debt to $12.6 billion [24] - A new buyback program was announced to acquire up to 40 million shares over the next 18 months [26] - The company is maintaining a healthy portfolio of FX hedges, with significant potential cash adjustments expected [25] Q&A Session All Questions and Answers Question: Insights on pulp market dynamics in China - Management provided updates on the pulp market, indicating a strong demand in China and a net zero effect of verticalization in 2025, with expectations for 2.8-3 million tons of new capacity in 2026 [32][34] Question: CAPEX trends and expectations - Management discussed the potential for lower CAPEX in 2026 due to non-recurring items, but did not provide specific guidance [31][35] Question: Buyback execution strategy - The company emphasized an opportunistic approach to buybacks, focusing on leveraging its balance sheet while considering market conditions [39][40] Question: Potential divestments and their impact on deleveraging - Management indicated that divestments would focus on non-core assets, particularly in the forestry business, but emphasized that deleveraging would primarily come from operational improvements [41][42] Question: Paper prices in China and their impact on pulp prices - Management noted that while paper prices are a factor, pulp prices typically drive paper prices, and they expect a recovery in paper prices [45][49] Question: U.S. packaging market outlook - The company highlighted its strong position in the U.S. packaging market, with stable demand and protected pricing under long-term contracts [51][52]

Financial Data and Key Metrics Changes - Cimpress achieved a milestone by exceeding $1 billion in quarterly revenue for the first time, with organic constant currency growth of 4% for the first half of the year, surpassing the previous guidance of 2%-3% [9][16] - Revenue for Q2 grew 11% on a reported basis and 4% on an organic constant currency basis, with growth across all segments [9][10] - Adjusted EBITDA increased by $6.6 million year-over-year, with profit dollars up 8% on a consolidated basis [11][12] - Adjusted free cash flow declined by $9.2 million to an inflow of $124 million, attributed to lower net working capital inflows [15][16] Business Line Data and Key Metrics Changes - In the Vista segment, organic constant currency growth was 5%, up from 3% in the prior year quarter, driven by double-digit growth in promotional products, apparel, gifts, and packaging [10][12] - The PrintBrothers segment reported a 26% revenue growth, with a contribution of $18 million from a tuck-in acquisition [11][12] - The Upload and Print segment saw a 6% organic constant currency revenue growth, with increased customer and order counts [11] Market Data and Key Metrics Changes - Strong performance in North America was the main driver of growth acceleration compared to the prior year quarter [11] - In Europe, consumer performance was weaker, with a decline year-over-year in Q2, attributed to tough comparisons from the previous year [21] Company Strategy and Development Direction - Cimpress is focusing on elevated products to improve customer lifetime value and wallet share, with variable gross profit per customer growing 9% year-over-year [4][10] - The company is investing in manufacturing efficiencies and new product introductions through Cross-Cimpress Fulfillment (XCF) [5][8] - Shared technology initiatives are aimed at reducing operating expenses and enhancing customer value [6][39] - The company remains confident in achieving fiscal 2028 targets, including an adjusted EBITDA of at least $600 million [7][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial future, highlighting a strong path to fiscal 2028 with significant deleveraging of the balance sheet [7][17] - The impact of tariffs is expected to lessen in future quarters as supply chain remediation continues [14] - Management noted that the hurricane in Jamaica posed challenges but was mitigated through operational adjustments [6][12] Other Important Information - The company completed a tuck-in acquisition for $10.4 million, expected to yield significant synergies [49][51] - Net leverage at the end of Q2 was 2.97 times trailing twelve months EBITDA, down from the previous quarter [15][16] Q&A Session Summary Question: How would you characterize the holiday season that just concluded for Vista? - Management reported a strong quarter for Vista, particularly in North America, with a balanced approach to holiday messaging [18] Question: Can you talk about the biggest areas of outperformance versus your initial FY 2026 guidance? - Management indicated solid execution across the board, with no significant areas of outperformance but some help from currency [24] Question: What are the underlying trends for customer cohorts in promotional products? - Strong growth in elevated products demonstrates increased wallet share among small business customers [30][31] Question: How has the North American business for the Print Group trended? - The Print Group is on track with revenues growing quarter-over-quarter, though still small in scale [34] Question: What is the company's view on Cross-Cimpress Fulfillment? - Management sees significant growth potential in Cross-Cimpress Fulfillment, which has doubled in revenue within a year [42][45] Question: Can you provide details on the tuck-in acquisition made this quarter? - The acquisition was for an Austrian printing group with significant synergy opportunities, expected to exceed a 15% hurdle rate [49][51]