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Mercer International Inc. Reports Fourth Quarter 2024 and Year End 2024 Results and Announces Quarterly Cash Dividend of $0.075
Source: Nasdaq GlobeNewswire / 20 Feb 2025 16:30:27 America/New_York
Selected Highlights
- Fourth quarter Operating EBITDA* increased to $99.2 million (net income of $16.7 million) from $50.5 million (net loss of $17.6 million) in the third quarter of 2024
- Full year 2024 Operating EBITDA increased to $243.7 million (net loss of $85.1 million) from $17.5 million (net loss of $242.1 million) in 2023
- Refinanced our former 2026 Senior Notes, extending the maturity of our earliest senior notes to 2028, and decreased our long-term debt by over $100.0 million using cash on hand
- Quarterly cash dividend of $0.075 per share
NEW YORK, Feb. 20, 2025 (GLOBE NEWSWIRE) -- Mercer International Inc. (Nasdaq: MERC) today reported fourth quarter 2024 Operating EBITDA of $99.2 million, an increase from $21.1 million in the same quarter of 2023 and $50.5 million in the third quarter of 2024.
In the fourth quarter of 2024, net income was $16.7 million ($0.25 per share) compared to a net loss of $87.2 million (negative $1.31 per share) in the fourth quarter of 2023 and a net loss of $17.6 million (negative $0.26 per share) in the third quarter of 2024.
Mr. Juan Carlos Bueno, Chief Executive Officer, stated: "With strengthened pulp markets, our operating results for the year improved significantly. In the fourth quarter of 2024, softwood pulp prices remained strong, decreasing slightly from recent record prices. Our operating results in the quarter benefited from a stronger dollar and no planned maintenance downtime. As we move into the first quarter of 2025, we currently expect modestly higher softwood pulp sales realizations due to stable demand and continued global softwood supply constraints.
Hardwood pulp prices in China and North America decreased in the fourth quarter of 2024 as the market absorbed capacity increases from earlier in the year. However, we currently believe hardwood pulp prices are near floor levels and are trending upwards in the first quarter of 2025 as the maintenance season begins in Latin America.
Lumber sales realizations increased in the fourth quarter of 2024 compared to the third quarter driven by modestly higher prices in the U.S. market, while in Europe, prices remained stable. In the first quarter of 2025, we currently expect lumber prices to modestly increase driven by stronger demand from certain European countries where economic conditions have improved and expect U.S. lumber prices to increase slightly due to limited North American supply.
Demand and pricing for our products may be further impacted by ongoing developments regarding U.S. trade policies involving Canada, the European Union and China. Our businesses have a relatively strong level of geographic and market diversification. As such, we expect the impacts of any tariffs and related measures to vary, including potentially presenting opportunities and some positive impacts, in areas of our operations.
Overall, per unit fiber costs for our pulp segment were flat in the fourth quarter of 2024 compared to the third quarter of 2024. Per unit fiber costs for our solid wood segment increased due to stable demand and tight supply. In the first quarter of 2025, we currently expect per unit fiber costs to be generally stable at our pulp mills. For our sawmills, we currently expect per unit fiber costs to increase due to continued tight supply.
We are currently planning for a total of 21 days of planned maintenance downtime at our Celgar mill in the first quarter of 2025.
In our solid wood segment, our mass timber business successfully completed two large-scale projects in the U.S. The current high-interest rate environment in Europe and North America continues to have an impact on our solid wood segment, putting downward pressure on both short-term growth and demand for this segment's products. However, we continue to believe that we are well positioned to capitalize on more opportunities as cyclical conditions start to improve."
Mr. Bueno concluded: "Our operating results this year improved significantly compared to the prior year, driven by stronger pulp markets, lower costs and the growth of our mass timber business. We finished 2024 with approximately $488.6 million in aggregate liquidity and reduced our long-term debt by over $100 million in the fourth quarter using cash on hand. This focus on debt reduction will remain a key goal as we move forward in this improved market environment."
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*Operating EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States ("GAAP") and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. See page 6 of the financial tables included in this press release for a reconciliation of net income (loss) to Operating EBITDA.Consolidated Financial Results
Q4 Q3 Q4 YTD YTD 2024 2024 2023 2024 2023 (in thousands, except per share amounts) Revenues $ 488,405 $ 502,141 $ 470,494 $ 2,043,360 $ 1,993,844 Operating income (loss) $ 50,393 $ 8,841 $ (56,395 ) $ 15,007 $ (188,774 ) Operating EBITDA $ 99,227 $ 50,455 $ 21,145 $ 243,722 $ 17,462 Net income (loss) $ 16,707 $ (17,559 ) $ (87,216 ) $ (85,141 ) $ (242,056 ) Net income (loss) per common share Basic $ 0.25 $ (0.26 ) $ (1.31 ) $ (1.27 ) $ (3.65 ) Diluted $ 0.25 $ (0.26 ) $ (1.31 ) $ (1.27 ) $ (3.65 )
Consolidated – Three Months Ended December 31, 2024 Compared to Three Months Ended December 31, 2023Total revenues for the fourth quarter of 2024 increased by approximately 4% to $488.4 million from $470.5 million in the same quarter of 2023 primarily due to higher pulp sales realizations partially offset by lower pulp sales volumes.
Costs and expenses in the fourth quarter of 2024 decreased by approximately 17% to $438.0 million from $526.9 million in the same quarter of 2023 driven by lower pulp sales volumes, foreign exchange gains mainly on dollar denominated accounts receivables held at our operations as the dollar strengthened relative to the euro and Canadian dollar at the end of 2024 and lower maintenance costs due to no days of planned maintenance downtime at our pulp mills in the fourth quarter of 2024 compared to 23 days in the fourth quarter of 2023. In the fourth quarter of 2023, we recognized a $33.7 million non-cash impairment in connection with the classification of our sandalwood business as held for sale.
In the fourth quarter of 2024, Operating EBITDA increased to $99.2 million from $21.1 million in the same quarter of 2023 primarily due to higher pulp sales realizations, the positive impact of a stronger dollar and no planned days of maintenance downtime at our pulp mills in the fourth quarter of 2024.
Segment Results
Pulp
Three Months Ended December 31, 2024 2023 (in thousands) Pulp revenues $ 351,181 $ 340,687 Energy and chemical revenues $ 24,332 $ 23,495 Segment Operating EBITDA(1) $ 106,130 $ 32,028 ______________ (1) Segment Operating EBITDA is a measure of segment profit or loss presented in our financial statements under GAAP. Refer to the segment information note in our consolidated financial statements for more information.
In the fourth quarter of 2024, Segment Operating EBITDA increased to $106.1 million from $32.0 million in the same quarter of 2023 primarily due to higher pulp sales realizations, foreign exchange gains mainly on dollar denominated accounts receivables held at our operations as the dollar strengthened relative to the euro and Canadian dollar at the end of 2024 and no days of planned maintenance downtime at our pulp mills in the fourth quarter of 2024 compared to 23 days in the fourth quarter of 2023.Pulp segment revenues, comprised of pulp, energy and chemical revenues, in the fourth quarter of 2024 increased by approximately 3% to $375.5 million from $364.2 million in the same quarter of 2023 primarily due to higher pulp revenues.
Pulp revenues in the fourth quarter of 2024 modestly increased to $351.2 million from $340.7 million in the same quarter of 2023 as a result of higher sales realizations partially offset by lower sales volumes.
In the fourth quarter of 2024, third-party industry quoted average list prices for NBSK pulp increased in both Europe and North America from the same quarter of 2023. Third-party industry quoted average net prices for NBSK pulp in China also increased from the same quarter of 2023. Our average NBSK pulp sales realizations in the fourth quarter of 2024 increased by approximately 12% to $794 per ADMT from $709 per ADMT in the same quarter of 2023. In the fourth quarter of 2024, average NBHK pulp sales realizations modestly decreased to $578 per ADMT from $593 per ADMT in the same quarter of 2023.
Total pulp sales volumes in the fourth quarter of 2024 decreased by approximately 8% to 451,914 ADMTs from 491,156 ADMTs in the same quarter of 2023 primarily due to lower production.
Energy and chemical revenues in the fourth quarter of 2024 were relatively flat at $24.3 million compared to $23.5 million in the same quarter of 2023.
Costs and expenses in the fourth quarter of 2024 decreased by approximately 16% to $306.9 million from $363.2 million in the same quarter of 2023 primarily due to lower pulp sales volumes, the positive foreign exchange impact of a stronger dollar and lower maintenance costs due to no days of planned downtime at our pulp mills in the fourth quarter of 2024 compared to 23 days in the fourth quarter of 2023.
Total pulp production in the fourth quarter of 2024 decreased by approximately 8% to 466,635 ADMTs compared with 507,670 ADMTs in the same quarter of 2023 primarily as a result of the dissolution of the Cariboo Pulp & Paper Company ("CPP") joint venture in the first quarter of 2024 and unplanned downtime at our Canadian mills partially offset by fewer days of planned maintenance downtime.
On average, in the fourth quarter of 2024, overall per unit fiber costs decreased by approximately 5% compared to the same quarter of 2023 due to stable supply at all our mills. In the first quarter of 2025, we currently expect per unit fiber costs to increase in Germany due to tight supply offset by modestly lower per unit fiber costs in Canada.
Solid Wood
Three Months Ended December 31, 2024 2023 (in thousands) Lumber revenues $ 58,586 $ 47,821 Energy revenues $ 4,780 $ 4,928 Manufactured products revenues(1) $ 12,673 $ 16,252 Pallet revenues $ 23,100 $ 23,767 Biofuels revenues(2) $ 11,411 $ 10,916 Wood residuals revenues $ 1,087 $ 1,759 Segment Operating EBITDA(3) $ (4,686 ) $ (5,632 ) ______________ (1) Manufactured products primarily includes cross-laminated timber ("CLT") and glue-laminated timber ("glulam"). (2) Biofuels includes pellets and briquettes. (3) Segment Operating EBITDA is a measure of segment profit or loss presented in our financial statements under GAAP. Refer to the segment information note in our consolidated financial statements for more information.
In the fourth quarter of 2024, Segment Operating EBITDA was relatively flat at negative $4.7 million compared to negative $5.6 million in the same quarter of 2023.Solid wood segment revenues in the fourth quarter of 2024 increased by approximately 6% to $111.6 million from $105.4 million in the same quarter of 2023 primarily due to higher lumber and biofuels revenues partially offset by lower revenues from our other products.
Lumber revenues in the fourth quarter of 2024 increased by approximately 23% to $58.6 million from $47.8 million in the same quarter of 2023 primarily as a result of higher sales realizations and sales volumes. Average lumber sales realizations in the fourth quarter of 2024 increased to $474 per Mfbm from $427 per Mfbm in the same quarter of 2023 driven by an increase in demand in both the U.S and European markets. The U.S. market accounted for approximately 45% of our lumber revenues and approximately 38% of our lumber sales volumes in the fourth quarter of 2024. Most of the balance of our lumber sales were in Europe.
Lumber sales volumes in the fourth quarter of 2024 increased by approximately 10% to 123.6 MMfbm from 112.0 MMfbm in the same quarter of 2023 due to timing of sales.
Manufactured products revenues in the fourth quarter of 2024 decreased by approximately 22% to $12.7 million from $16.3 million in the same quarter of 2023 primarily due to lower sales volumes as we completed our major mass timber projects in the third quarter of 2024.
Lumber production in the fourth quarter of 2024 was relatively stable at 114.7 MMfbm compared to 111.6 MMfbm in the same quarter of 2023.
Fiber costs were approximately 75% of our lumber cash production costs in the fourth quarter of 2024. In the fourth quarter of 2024, per unit fiber costs for lumber increased by approximately 18% compared to the same quarter of 2023 primarily due to stable demand and tight supply. In the first quarter of 2025, we currently expect per unit fiber costs to increase due to continued tight supply.
Consolidated – Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Total revenues in 2024 modestly increased to $2,043.4 million from $1,993.8 million in 2023 as higher pulp, manufactured products and lumber sales realizations were offset by lower sales realizations from our other products and lower pulp and lumber sales volumes.
Costs and expenses in 2024 decreased by approximately 7% to $2,028.4 million from $2,182.6 million in 2023 primarily as a result of lower per unit production costs due to the easing of inflationary pressure and cost reduction initiatives, lower sales volumes and foreign exchange gains mainly on dollar denominated accounts receivables held at our operations as the dollar strengthened relative to the euro and Canadian dollar at the end of 2024. In 2024, costs and expenses included a non-cash loss of $23.6 million recognized in connection with the dissolution of the CPP joint venture and a non-cash goodwill impairment of $34.3 million related to the Torgau facility, which was recognized as a result of ongoing weakness in lumber, pallet and biofuels markets in Europe stemming from high interest rates and other economic conditions. We have achieved some of the planned synergies from the Torgau acquisition and expect to achieve further synergies as market and economic conditions improve. In 2023, we received insurance proceeds of $46.4 million relating to the 2021 turbine downtime at the Rosenthal mill and the 2022 fire at the Stendal mill and we recognized a $33.7 million non-cash impairment in connection with the classification of our sandalwood business as held for sale.
In 2024, Operating EBITDA increased to $243.7 million from $17.5 million in 2023 primarily due to higher pulp, manufactured products and lumber sales realizations, lower per unit fiber and other production costs and the positive foreign exchange impact of a stronger dollar. These increases were partially offset by lower sales realizations from our other products. In 2023, we received insurance proceeds of $46.4 million relating to the 2021 turbine downtime at the Rosenthal mill and the 2022 fire at the Stendal mill.
Liquidity
As of December 31, 2024, we had cash and cash equivalents of $184.9 million, approximately $303.7 million available under our revolving credit facilities and aggregate liquidity of about $488.6 million.
The following table is a summary of selected financial information as of the dates indicated:
As of December 31, 2024 2023 (in thousands) Cash and cash equivalents $ 184,925 $ 313,992 Working capital $ 653,466 $ 806,468 Total assets $ 2,262,932 $ 2,662,578 Long-term liabilities $ 1,576,619 $ 1,740,731 Total shareholders' equity $ 429,775 $ 635,410
Quarterly DividendA quarterly dividend of $0.075 per share will be paid on April 2, 2025 to all shareholders of record on March 26, 2025. Future dividends will be subject to Board approval and may be adjusted as business and industry conditions warrant.
Earnings Release Call
In conjunction with this release, Mercer International Inc. will host a conference call, which will be simultaneously broadcast live over the Internet. Management will host the call, which is scheduled for February 21, 2025 at 10:00 AM ET. Listeners can access the conference call live and archived for 30 days over the Internet at https://edge.media-server.com/mmc/p/88s2i4a9 or through a link on the company's home page at https://www.mercerint.com. Please allow 15 minutes prior to the call to visit the website and download and install any necessary audio software.
Mercer International Inc. is a global forest products company with operations in Germany, USA and Canada with consolidated annual production capacity of 2.1 million tonnes of pulp, 960 million board feet of lumber, 210 thousand cubic meters of CLT, 45 thousand cubic meters of glulam, 17 million pallets and 230 thousand tonnes of biofuels. To obtain further information on the company, please visit its website at https://www.mercerint.com.
The preceding includes forward-looking statements which involve known and unknown risks and uncertainties which may cause our actual results in future periods to differ materially from forecasted results. Words such as "expects", "anticipates", "are optimistic that", "projects", "intends", "designed", "will", "believes", "estimates", "may", "could" and variations of such words and similar expressions are intended to identify such forward-looking statements. Among those factors which could cause actual results to differ materially are the following: the highly cyclical nature of our business, raw material costs, our level of indebtedness, competition, foreign exchange and interest rate fluctuations, our use of derivatives, expenditures for capital projects, environmental regulation and compliance, disruptions to our production, market conditions and other risk factors listed from time to time in our SEC reports.
APPROVED BY:
William D. McCartney
Chairman
(604) 684-1099Juan Carlos Bueno
Chief Executive Officer
(604) 684-1099-FINANCIAL TABLES FOLLOW-
Summary Financial Highlights
Q4 Q3 Q4 YTD YTD 2024 2024 2023 2024 2023 (in thousands, except per share amounts) Revenues from external customers Pulp segment $ 375,513 $ 373,268 $ 364,182 $ 1,548,556 $ 1,516,130 Solid wood segment 111,637 125,093 105,443 485,991 472,054 Corporate and other 1,255 3,780 869 8,813 5,660 Total revenues $ 488,405 $ 502,141 $ 470,494 $ 2,043,360 $ 1,993,844 Pulp Segment Operating EBITDA(1) $ 106,130 $ 54,645 $ 32,028 $ 260,914 $ 65,889 Solid wood Segment Operating EBITDA(1) (4,686 ) (1,933 ) (5,632 ) (4,390 ) (30,343 ) Corporate and other (2,217 ) (2,257 ) (5,251 ) (12,802 ) (18,084 ) Operating EBITDA(2) $ 99,227 $ 50,455 $ 21,145 $ 243,722 $ 17,462 Net income (loss) $ 16,707 $ (17,559 ) $ (87,216 ) $ (85,141 ) $ (242,056 ) Net income (loss) per common share Basic $ 0.25 $ (0.26 ) $ (1.31 ) $ (1.27 ) $ (3.65 ) Diluted $ 0.25 $ (0.26 ) $ (1.31 ) $ (1.27 ) $ (3.65 ) Common shares outstanding at period end 66,871 66,871 66,525 66,871 66,525 ______________ (1) Segment Operating EBITDA is a measure of segment profit or loss presented in our financial statements under GAAP. Refer to the segment information note in our consolidated financial statements for more information. (2) Operating EBITDA is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. See page 6 of the financial tables included in this press release for a reconciliation of net income (loss) to Operating EBITDA.
Summary Operating HighlightsQ4 Q3 Q4 YTD YTD 2024 2024 2023 2024 2023 Pulp Segment Pulp production ('000 ADMTs) NBSK 403.7 374.4 436.2 1,589.1 1,714.4 NBHK 63.0 41.4 71.5 254.0 251.2 Annual maintenance downtime ('000 ADMTs) — 22.1 31.6 86.9 82.9 Annual maintenance downtime (days) — 20 23 57 71 Pulp sales ('000 ADMTs) NBSK 405.5 376.2 411.8 1,647.5 1,689.0 NBHK 46.5 72.6 79.4 252.3 262.2 Average NBSK pulp prices ($/ADMT)(1) Europe 1,500 1,573 1,245 1,519 1,257 China 767 771 748 774 747 North America 1,687 1,762 1,312 1,646 1,448 Average NBHK pulp prices ($/ADMT)(1) China 548 635 643 645 592 North America 1,298 1,467 1,083 1,356 1,227 Average pulp sales realizations ($/ADMT)(2) NBSK 794 814 709 784 729 NBHK 578 632 593 637 627 Energy production ('000 MWh)(3) 545.1 509.8 544.6 2,125.3 2,142.0 Energy sales ('000 MWh)(3) 204.7 187.0 213.2 797.2 832.6 Average energy sales realizations ($/MWh)(3) 105 86 92 91 107 Solid Wood Segment Lumber Production (MMfbm) 114.7 122.5 111.6 475.6 462.3 Sales (MMfbm) 123.6 108.8 112.0 470.4 500.5 Average sales realizations ($/Mfbm) 474 451 427 462 435 Energy Production and sales ('000 MWh) 36.1 17.9 38.7 126.3 160.2 Average sales realizations ($/MWh) 133 145 127 131 134 Manufactured products(4) Production ('000 cubic meters) 5.8 9.8 10.2 34.0 25.1 Sales ('000 cubic meters) 5.7 9.9 12.1 30.7 33.4 Average sales realizations ($/cubic meters) 1,880 3,463 1,234 3,006 1,514 Pallets Production ('000 units) 2,113.8 2,525.5 2,184.7 10,243.5 10,707.2 Sales ('000 units) 2,155.8 2,446.7 2,450.7 10,089.2 11,041.2 Average sales realizations ($/unit) 11 11 10 10 11 Biofuels(5) Production ('000 tonnes) 40.8 40.6 38.9 160.4 167.2 Sales ('000 tonnes) 52.2 43.5 39.9 184.4 144.8 Average sales realizations ($/tonne) 218 213 274 217 281 Average Spot Currency Exchange Rates $ / €(6) 1.0668 1.0987 1.0761 1.0820 1.0817 $ / C$(6) 0.7151 0.7331 0.7347 0.7302 0.7412 ______________ (1) Source: RISI pricing report. Europe and North America are list prices. China are net prices which include discounts, allowances and rebates. (2) Sales realizations after customer discounts, rebates and other selling concessions. (3) Does not include our 50% joint venture interest in the CPP mill, which is accounted for using the equity method. In March 2024, we disposed of this interest in CPP. (4) Manufactured products primarily includes CLT and glulam. (5) Biofuels includes pellets and briquettes. (6) Average Federal Reserve Bank of New York Noon Buying Rates over the reporting period. MERCER INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) Three Months Ended
December 31,Year Ended
December 31,2024 2023 2024 2023 Revenues $ 488,405 $ 470,494 $ 2,043,360 $ 1,993,844 Costs and expenses Cost of sales, excluding depreciation and amortization 363,456 422,677 1,683,456 1,853,482 Cost of sales depreciation and amortization 48,769 43,738 170,542 172,223 Selling, general and administrative expenses 25,787 26,740 116,433 123,179 Impairment of sandalwood business held for sale — 33,734 — 33,734 Loss on disposal of investment in joint venture — — 23,645 — Goodwill impairment — — 34,277 — Operating income (loss) 50,393 (56,395 ) 15,007 (188,774 ) Other income (expenses) Interest expense (28,319 ) (27,245 ) (109,150 ) (88,246 ) Other income (expenses) (1,919 ) (2,492 ) 7,228 7,197 Total other expenses, net (30,238 ) (29,737 ) (101,922 ) (81,049 ) Income (loss) before income taxes 20,155 (86,132 ) (86,915 ) (269,823 ) Income tax recovery (provision) (3,448 ) (1,084 ) 1,774 27,767 Net income (loss) $ 16,707 $ (87,216 ) $ (85,141 ) $ (242,056 ) Net income (loss) per common share Basic $ 0.25 $ (1.31 ) $ (1.27 ) $ (3.65 ) Diluted $ 0.25 $ (1.31 ) $ (1.27 ) $ (3.65 ) Dividends declared per common share $ 0.075 $ 0.075 $ 0.300 $ 0.300 MERCER INTERNATIONAL INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and per share data) December 31, 2024 2023 ASSETS Current assets Cash and cash equivalents $ 184,925 $ 313,992 Accounts receivable, net 327,345 306,166 Inventories 361,682 414,161 Prepaid expenses and other 17,601 23,461 Assets classified as held for sale 18,451 35,125 Total current assets 910,004 1,092,905 Property, plant and equipment, net 1,254,715 1,409,937 Investment in joint ventures 3,348 41,665 Amortizable intangible assets, net 49,829 52,641 Goodwill — 35,381 Operating lease right-of-use assets 7,598 11,725 Pension asset 9,378 5,588 Deferred income tax assets 17,778 661 Other long-term assets 10,282 12,075 Total assets $ 2,262,932 $ 2,662,578 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable and other $ 248,661 $ 278,986 Pension and other post-retirement benefit obligations 732 826 Liabilities associated with assets held for sale 7,145 6,625 Total current liabilities 256,538 286,437 Long-term debt 1,473,986 1,609,425 Pension and other post-retirement benefit obligations 11,134 12,483 Operating lease liabilities 4,793 7,755 Deferred income tax liabilities 74,772 97,324 Other long-term liabilities 11,934 13,744 Total liabilities 1,833,157 2,027,168 Shareholders’ equity Common shares $1 par value; 200,000,000 authorized; 66,871,000 issued and outstanding (2023 – 66,525,000) 66,850 66,471 Additional paid-in capital 362,782 359,497 Retained earnings 230,912 336,113 Accumulated other comprehensive loss (230,769 ) (126,671 ) Total shareholders’ equity 429,775 635,410 Total liabilities and shareholders’ equity $ 2,262,932 $ 2,662,578 MERCER INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) For the Year Ended December 31, 2024 2023 2022 Cash flows from (used in) operating activities Net income (loss) $ (85,141 ) $ (242,056 ) $ 247,039 Adjustments to reconcile net income (loss) to cash flows from operating activities Depreciation and amortization 170,793 172,502 144,153 Deferred income tax provision (recovery) (35,721 ) (36,392 ) 7,003 Inventory impairment 9,000 58,600 — Impairment of sandalwood business held for sale — 33,734 — Loss on disposal of investment in joint venture 23,645 — — Goodwill impairment 34,277 — — Defined benefit pension plans and other post-retirement benefit plan expense 1,272 5,214 1,708 Stock compensation expense 3,859 5,922 6,737 Foreign exchange transaction losses (gains) (8,311 ) 3,905 (16,802 ) Other 2,087 (5,092 ) (1,241 ) Defined benefit pension plans and other post-retirement benefit plan contributions (675 ) (1,152 ) (2,942 ) Changes in working capital Accounts receivable (32,094 ) 52,507 (20,476 ) Inventories 23,907 (15,836 ) (63,184 ) Accounts payable and accrued expenses (17,680 ) (98,182 ) 66,796 Other 986 (2,679 ) (8,131 ) Net cash from (used in) operating activities 90,204 (69,005 ) 360,660 Cash flows from (used in) investing activities Purchase of property, plant and equipment (84,318 ) (136,324 ) (178,742 ) Proceeds from sale of property, plant and equipment 19,874 3,408 1,689 Acquisition, net of cash — (82,100 ) (256,604 ) Property insurance proceeds 773 12,203 8,616 Proceeds from government grants 787 5,569 1,067 Purchase of term deposit — — (75,000 ) Proceeds from sale of term deposit — — 75,519 Other (4,108 ) (2,623 ) (1,155 ) Net cash from (used in) investing activities (66,992 ) (199,867 ) (424,610 ) Cash flows from (used in) financing activities Redemption of senior notes (300,000 ) — — Proceeds from issuance of senior notes 206,000 200,000 — Proceeds from (repayment of) revolving credit facilities, net (25,061 ) 61,272 115,330 Dividend payments (20,060 ) (19,950 ) (19,847 ) Payment of debt issuance costs (4,515 ) (4,865 ) (3,871 ) Payment of finance lease obligations (8,918 ) (7,785 ) (10,003 ) Other (229 ) (48 ) (711 ) Net cash from (used in) financing activities (152,783 ) 228,624 80,898 Effect of exchange rate changes on cash and cash equivalents 504 208 (8,526 ) Net increase (decrease) in cash and cash equivalents (129,067 ) (40,040 ) 8,422 Cash and cash equivalents, beginning of year 313,992 354,032 345,610 Cash and cash equivalents, end of year $ 184,925 $ 313,992 $ 354,032
MERCER INTERNATIONAL INC.
COMPUTATION OF OPERATING EBITDA
(Unaudited)
(In thousands)Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and long-lived asset impairment charges. Management uses Operating EBITDA as a benchmark measurement of its own operating results, and as a benchmark relative to its competitors. Management considers it to be a meaningful supplement to operating income (loss) as a performance measure primarily because depreciation expense and long-lived asset impairment charges are not actual cash costs, and depreciation expense varies widely from company to company in a manner that management considers largely independent of the underlying cost efficiency of our operating facilities. In addition, management believes Operating EBITDA is commonly used by securities analysts, investors and other interested parties to evaluate our financial performance.
Operating EBITDA does not reflect the impact of a number of items that affect our net income (loss), including financing costs, income taxes and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under GAAP and should not be considered as an alternative to net income (loss) or operating income (loss) as a measure of performance, nor as an alternative to net cash from (used in) operating activities as a measure of liquidity. Operating EBITDA is an internal measure and therefore may not be comparable to other companies.
Operating EBITDA is a non-GAAP financial measure at the consolidated level and is considered different from Operating EBITDA at the segment level, referred to as “Segment Operating EBITDA”, which is our single measure of segment profit or loss presented in our financial statements under GAAP. For more information on Segment Operating EBITDA, refer to the segment information note within our consolidated financial statements.
The following table sets forth a reconciliation of net income (loss) to Operating EBITDA for the periods indicated:
Q4 Q3 Q4 YTD YTD 2024 2024 2023 2024 2023 Net income (loss) $ 16,707 $ (17,559 ) $ (87,216 ) $ (85,141 ) $ (242,056 ) Income tax provision (recovery) 3,448 (120 ) 1,084 (1,774 ) (27,767 ) Interest expense 28,319 26,429 27,245 109,150 88,246 Other expenses (income) 1,919 91 2,492 (7,228 ) (7,197 ) Operating income (loss) 50,393 8,841 (56,395 ) 15,007 (188,774 ) Add: Depreciation and amortization 48,834 41,614 43,806 170,793 172,502 Add: Impairment of sandalwood business held for sale — — 33,734 — 33,734 Add: Loss on disposal of investment in joint venture — — — 23,645 — Add: Goodwill impairment — — — 34,277 — Operating EBITDA $ 99,227 $ 50,455 $ 21,145 $ 243,722 $ 17,462 
