Mercer International Inc. Reports First Quarter 2023 Results and Announces Quarterly Cash Dividend of $0.075
Selected Highlights
- First quarter Operating EBITDA* of $27.5 million and net loss of $30.6 million
- Mass Timber business continues to grow its cross-laminated timber order book
- Quarterly cash dividend of $0.075 per share
NEW YORK, May 04, 2023 (GLOBE NEWSWIRE) — Mercer International Inc. (Nasdaq: MERC) today reported first quarter 2023 Operating EBITDA of $27.5 million, net of a $15.2 million non-cash inventory impairment charge, a decrease from $154.5 million in the first quarter of 2022 and $96.1 million in the fourth quarter of 2022.
In the first quarter of 2023, net loss was $30.6 million (or $0.46 per share) compared to net income of $88.9 million (or $1.35 per basic share and $1.34 per diluted share) in the first quarter of 2022 and net income of $20.0 million (or $0.30 per share) in the fourth quarter of 2022.
Mr. Juan Carlos Bueno, the Chief Executive Officer, stated: “In the first quarter, we achieved strong operational performance in both our pulp and solid wood segments. Our results in the quarter were negatively impacted by the lingering effects of inflation on our key inputs such as fiber and chemicals. We also experienced lower prices for most of our products in the quarter. Lower pulp prices were primarily the result of weak demand out of China, while lumber prices were weak through the first quarter as high interest rates and uncertain economic indicators impacted residential construction. Our per unit fiber costs reached a peak in the first quarter of 2023 due to reduced wood chip availability for our Canadian pulp mills as a result of sawmill curtailments and high fiber prices for our German pulp mills as we work through high cost inventory acquired in late 2022 when there was strong demand for wood as an energy source.
Our pulp segment had strong production in the first quarter of 2023 with an increase of approximately 7% compared to the fourth quarter of 2022. Pulp sales volumes decreased 6% relative to the fourth quarter as a result of weaker demand.
Our Friesau mill had record production in the first quarter of 2023. Overall our lumber production increased approximately 14% compared to the fourth quarter of 2022 and our lumber sales volumes increased approximately 41% due to higher production and increasing demand as a result of lower prices.
During the quarter we continued our integration activities at Torgau. In the first quarter of 2023, the synergies achieved were nominal due to low sales realizations for lumber and wood residuals, but we continue to expect annual synergies of approximately $16 million once market conditions improve. Our integration efforts are ongoing as we work to capture all available synergies.
Looking forward to the second quarter of 2023, we currently believe pulp prices will decline, with additional downward pricing pressure on hardwood pulp as the market adjusts to new South American supply. We expect lower softwood pulp prices to be short-lived because of low customer inventory levels. Lumber demand is expected to see a modest increase as we move into the residential construction season, which we believe will also create some upward pricing pressure.
Our Mass Timber business continues to grow its order book. We are pleased with the rate at which our assembled sales team is onboarding new customers. This has allowed us to start building a robust order book, including participation in some leading and complex cross-laminated timber projects. With one of the most modern facilities in the world, we are excited about the future growth potential of this business as cross-laminated timber has been rapidly gaining market share in the construction business.”
Mr. Bueno concluded: “Although economic uncertainty and high inflation have negatively impacted our short-term financial results, we are now experiencing reductions in input costs such as fiber and chemicals. In addition, we have strong liquidity and a strong operational foundation that give us many options to continue to grow and diversify our solid wood and bio-product revenues. We will continue to manage our liquidity and working capital prudently and run the Company based on continuous improvement to enhance efficiency and lower costs.”
______________________
*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
| Q1 | Q4 | Q1 | ||||||||||
| 2023 | 2022 | 2022 | ||||||||||
| (in thousands, except per share amounts) | ||||||||||||
| Revenues | $ | 522,666 | $ | 583,056 | $ | 592,741 | ||||||
| Operating income (loss) | $ | (20,121 | ) | $ | 47,263 | $ | 122,351 | |||||
| Operating EBITDA | $ | 27,470 | $ | 96,128 | $ | 154,467 | ||||||
| Net income (loss) | $ | (30,578 | ) | $ | 20,024 | $ | 88,897 | |||||
| Net income (loss) per common share | ||||||||||||
| Basic | $ | (0.46 | ) | $ | 0.30 | $ | 1.35 | |||||
| Diluted | $ | (0.46 | ) | $ | 0.30 | $ | 1.34 | |||||
Consolidated – Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
Total revenues in the first quarter of 2023 decreased by approximately 12% to $522.7 million from $592.7 million in the same quarter of 2022 primarily due to lower pulp sales volumes and lower lumber and energy sales realizations partially offset by the inclusion of Torgau and higher lumber sales volumes and pulp sales realizations.
Costs and expenses in the first quarter of 2023 increased by approximately 15% to $542.8 million from $470.4 million in the first quarter of 2022 primarily due to higher fiber and chemical costs, the inclusion of Torgau and a non-cash inventory impairment of $15.2 million substantially related to hardwood inventory at the Peace River mill as a result of lower hardwood pulp prices and high production and logistics costs. These increases were partially offset by lower pulp sales volumes, the positive impact of a stronger dollar on our Canadian dollar and euro denominated costs and expenses and the receipt of €7.0 million ($7.5 million) in insurance proceeds in the current quarter relating to the July 2022 fire at our Stendal mill.
In the first quarter of 2023, Operating EBITDA decreased to $27.5 million from $154.5 million in the same quarter of 2022 primarily due to higher per unit fiber and chemical costs, lower lumber and energy sales realizations, lower pulp sales volumes and the non-cash impairment substantially related to hardwood inventory partially offset by higher pulp sales realizations and the positive impact of a stronger dollar.
Segment Results
Pulp
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| (in thousands) | ||||||||
| Pulp revenues | $ | 369,656 | $ | 446,911 | ||||
| Energy and chemical revenues | $ | 30,745 | $ | 39,020 | ||||
| Operating income | $ | 12,771 | $ | 86,236 | ||||
In the first quarter of 2023, pulp segment operating income decreased to $12.8 million from $86.2 million in the same quarter of 2022 primarily due to higher per unit fiber and chemical costs, lower pulp sales volumes and the non-cash inventory impairment of $15.2 million partially offset by higher pulp sales realizations and the positive impact of a stronger dollar.
Pulp revenues in the first quarter of 2023 decreased by approximately 17% to $369.7 million from $446.9 million in the same quarter of 2022 due to lower sales volumes partially offset by higher sales realizations. Total pulp sales volumes decreased by approximately 21% to 435,973 ADMTs in the first quarter of 2023 from 555,035 ADMTs in the same quarter of 2022 primarily as a result of lower demand as inflationary pressures are negatively impacting paper demand. In the first quarter of 2023, third party industry quoted average list prices for NBSK pulp increased in Europe and North America and were flat in China from the same quarter of 2022. Our average NBSK pulp sales realizations increased by approximately 5% to $849 per ADMT in the first quarter of 2023 from approximately $812 per ADMT in the same quarter of 2022. However, prices began to weaken late in the first quarter of 2023 and have slid further early in the second quarter.
Costs and expenses in the first quarter of 2023 modestly decreased to $388.0 million from $399.7 million in the first quarter of 2022 primarily due to lower pulp sales volumes, the positive impact of a stronger dollar and the receipt of €7.0 million ($7.5 million) in insurance proceeds in the current quarter relating to the July 2022 fire at our Stendal mill partially offset by higher per unit fiber and chemical costs. The first quarter of 2023 included a non-cash inventory impairment of $15.2 million which substantially related to hardwood inventories at the Peace River mill.
In the first quarter of 2023 per unit fiber costs increased by approximately 43% from the same quarter of 2022 due to higher per unit fiber costs for all of our pulp mills. Our German mills had higher per unit fiber costs as a result of strong demand from other wood consumers such as heating pellet manufacturers in response to energy shortages caused by the war in Ukraine. For our Canadian mills, per unit fiber costs increased due to strong demand in the mills’ fiber baskets and for our Celgar mill a decrease in the availability of wood chips because of regional sawmill curtailments. We currently expect per unit fiber costs to decrease in the second quarter of 2023 with a decrease in Germany due to less demand for wood for energy purposes and in Canada as a result of increased wood chip availability from increased sawmill production and realizing the early benefits from using the Peace River wood room which was completed in the first quarter of 2023.
Solid Wood
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| (in thousands) | ||||||||
| Lumber revenues | $ | 60,039 | $ | 92,366 | ||||
| Energy revenues | $ | 5,695 | $ | 5,177 | ||||
| Manufactured products revenues(1) | $ | 5,804 | $ | 3,764 | ||||
| Pallet revenues | $ | 36,175 | $ | — | ||||
| Biofuel revenues(2) | $ | 8,135 | $ | — | ||||
| Wood residuals revenues | $ | 5,166 | $ | 3,490 | ||||
| Operating income (loss) | $ | (27,069 | ) | $ | 38,301 | |||
___________
(1) Manufactured products primarily includes finger joint lumber and cross-laminated timber.
(2) Biofuels includes pellets and briquettes.
In the first quarter of 2023, operating loss was $27.1 million compared to operating income of $38.3 million in the same quarter of 2022 primarily due to lower sales realizations.
Average lumber sales realizations decreased by approximately 49% to $429 per Mfbm in the first quarter of 2023 from approximately $840 per Mfbm in the same quarter of 2022 as a result of lower demand in both the U.S. and European markets. Demand was negatively impacted by concerns over rising interest rates, inflationary pressures and an uncertain economic outlook.
Fiber costs were approximately 80% of our lumber cash production costs in the first quarter of 2023. In the first quarter of 2023, per unit fiber costs for lumber production increased by approximately 6% compared to the same quarter of 2022. Higher per unit fiber costs were due to strong fiber demand in Germany. We currently expect stable per unit fiber costs in the second quarter of 2023 .
Liquidity
The following table is a summary of selected financial information as of the dates indicated:
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (in thousands) | ||||||||
| Cash and cash equivalents | $ | 300,560 | $ | 354,032 | ||||
| Working capital | $ | 813,165 | $ | 800,114 | ||||
| Total assets | $ | 2,740,475 | $ | 2,725,037 | ||||
| Long-term liabilities | $ | 1,534,924 | $ | 1,508,192 | ||||
| Total shareholders’ equity | $ | 822,873 | $ | 838,784 | ||||
As of March 31, 2023, we had cash and cash equivalents of $300.6 million and approximately $255.4 million available under our revolving credit facilities providing us with aggregate liquidity of about $556.0 million.
At the end of the first quarter of 2023, our inventories increased to a high level of $531.4 million. The increase reflected, among other things, a build up in fiber in front of the recently completed wood room at our Peace River pulp mill and overall market conditions. We expect inventory levels to normalize in the second and coming quarters of 2023.
Quarterly Dividend
A quarterly dividend of $0.075 per share will be paid on July 6, 2023 to all shareholders of record on June 28, 2023. 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 May 5, 2023 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/6ggi8pip 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 site 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 2.3 million tonnes of pulp, 960 million board feet of lumber, 140 thousand cubic meters of cross-laminated timber, 17 million pallets and 230,000 metric tonnes of biofuels. To obtain further information on the company, please visit its web site 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:
Jimmy S.H. Lee
Executive Chairman
(604) 684-1099
Juan Carlos Bueno
Chief Executive Officer
(604) 684-1099
-FINANCIAL TABLES FOLLOW-
Summary Financial Highlights
| Q1 | Q4 | Q1 | ||||||||||
| 2023 | 2022 | 2022 | ||||||||||
| (in thousands, except per share amounts) | ||||||||||||
| Pulp segment revenues | $ | 400,401 | $ | 463,225 | $ | 485,931 | ||||||
| Solid wood segment revenues | 121,014 | 118,410 | 104,797 | |||||||||
| Corporate and other revenues | 1,251 | 1,421 | 2,013 | |||||||||
| Total revenues | $ | 522,666 | $ | 583,056 | $ | 592,741 | ||||||
| Pulp segment operating income | $ | 12,771 | $ | 68,972 | $ | 86,236 | ||||||
| Solid wood segment operating income (loss) | (27,069 | ) | (14,281 | ) | 38,301 | |||||||
| Corporate and other operating loss | (5,823 | ) | (7,428 | ) | (2,186 | ) | ||||||
| Total operating income (loss) | $ | (20,121 | ) | $ | 47,263 | $ | 122,351 | |||||
| Pulp segment depreciation and amortization | $ | 27,399 | $ | 29,199 | $ | 27,684 | ||||||
| Solid wood segment depreciation and amortization | 19,898 | 19,451 | 4,194 | |||||||||
| Corporate and other depreciation and amortization | 294 | 215 | 238 | |||||||||
| Total depreciation and amortization | $ | 47,591 | $ | 48,865 | $ | 32,116 | ||||||
| Operating EBITDA | $ | 27,470 | $ | 96,128 | $ | 154,467 | ||||||
| Income tax recovery (provision) | $ | 5,356 | $ | (8,608 | ) | $ | (24,236 | ) | ||||
| Net income (loss) | $ | (30,578 | ) | $ | 20,024 | $ | 88,897 | |||||
| Net income (loss) per common share | ||||||||||||
| Basic | $ | (0.46 | ) | $ | 0.30 | $ | 1.35 | |||||
| Diluted | $ | (0.46 | ) | $ | 0.30 | $ | 1.34 | |||||
| Common shares outstanding at period end | 66,421 | 66,167 | 66,132 | |||||||||
Summary Operating Highlights
| Q1 | Q4 | Q1 | ||||||||||
| 2023 | 2022 | 2022 | ||||||||||
| Pulp Segment | ||||||||||||
| Pulp production (‘000 ADMTs) | ||||||||||||
| NBSK | 430.0 | 390.9 | 435.5 | |||||||||
| NBHK | 72.3 | 80.6 | 56.8 | |||||||||
| Annual maintenance downtime (‘000 ADMTs) | 13.5 | 39.5 | — | |||||||||
| Annual maintenance downtime (days) | 10 | 21 | — | |||||||||
| Pulp sales (‘000 ADMTs) | ||||||||||||
| NBSK | 378.6 | 393.4 | 505.1 | |||||||||
| NBHK | 57.4 | 72.0 | 49.9 | |||||||||
| Average NBSK pulp prices ($/ADMT)(1) | ||||||||||||
| Europe | 1,377 | 1,442 | 1,330 | |||||||||
| China | 891 | 920 | 899 | |||||||||
| North America | 1,675 | 1,745 | 1,527 | |||||||||
| Average NBHK pulp prices ($/ADMT)(1) | ||||||||||||
| China | 710 | 837 | 668 | |||||||||
| North America | 1,523 | 1,608 | 1,312 | |||||||||
| Average pulp sales realizations ($/ADMT)(2) | ||||||||||||
| NBSK | 849 | 913 | 812 | |||||||||
| NBHK | 809 | 896 | 695 | |||||||||
| Energy production (‘000 MWh)(3) | 534.6 | 515.8 | 531.5 | |||||||||
| Energy sales (‘000 MWh)(3) | 196.9 | 183.4 | 194.7 | |||||||||
| Average energy sales realizations ($/MWh)(3) | 122 | (4) | 156 | (4) | 186 | |||||||
| Solid Wood Segment | ||||||||||||
| Lumber | ||||||||||||
| Production (MMfbm) | 134.0 | 117.3 | 115.6 | |||||||||
| Sales (MMfbm) | 139.9 | 99.2 | 109.9 | |||||||||
| Average sales realizations ($/Mfbm) | 429 | 454 | 840 | |||||||||
| Energy | ||||||||||||
| Production and sales (‘000 MWh) | 40.5 | 39.0 | 24.5 | |||||||||
| Average sales realizations ($/MWh) | 141 | (4) | 159 | (4) | 211 | |||||||
| Manufactured products(5) | ||||||||||||
| Production (‘000 cubic meters) | 0.8 | 8.3 | 5.5 | |||||||||
| Sales (‘000 cubic meters) | 4.3 | 6.1 | 5.6 | |||||||||
| Average sales realizations ($/cubic meters) | 666 | 561 | 671 | |||||||||
| Pallets | ||||||||||||
| Production (‘000 units) | 2,880.2 | 2,568.4 | — | |||||||||
| Sales (‘000 units) | 2,942.4 | 2,646.3 | — | |||||||||
| Average sales realizations ($/unit) | 12 | 14 | — | |||||||||
| Biofuels(6) | ||||||||||||
| Production (‘000 tonnes) | 32.6 | 45.7 | — | |||||||||
| Sales (‘000 tonnes) | 25.8 | 49.8 | — | |||||||||
| Average realizations ($/tonne) | 315 | 355 | — | |||||||||
| Average Spot Currency Exchange Rates | ||||||||||||
| $ / €(7) | 1.0730 | 1.0218 | 1.1216 | |||||||||
| $ / C$(7) | 0.7393 | 0.7366 | 0.7897 | |||||||||
__________
(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. Incorporates the effect of pulp price variations occurring between the order and shipment dates.
(3) Does not include our 50% joint venture interest in the Cariboo mill, which is accounted for using the equity method.
(4) Energy sales realizations are net of the German energy windfall tax implemented by the German government in December 2022. The German energy windfall tax for the pulp segment was $1.1 million for Q1 2023 and $6.7 million for Q4 2022. The German energy windfall tax for the solid wood segment was $nil million for Q1 2023 and $1.1 million for Q4 2022.
(5) Manufactured products includes finger joint lumber and cross-laminated timber.
(6) Biofuels includes pellets and briquettes.
(7) Average Federal Reserve Bank of New York Noon Buying Rates over the reporting period.
| MERCER INTERNATIONAL INC. | ||||||||
| INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except per share data) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenues | $ | 522,666 | $ | 592,741 | ||||
| Costs and expenses | ||||||||
| Cost of sales, excluding depreciation and amortization | 461,338 | 416,095 | ||||||
| Cost of sales depreciation and amortization | 47,498 | 32,097 | ||||||
| Selling, general and administrative expenses | 33,951 | 22,198 | ||||||
| Operating income (loss) | (20,121 | ) | 122,351 | |||||
| Other income (expenses) | ||||||||
| Interest expense | (19,047 | ) | (17,464 | ) | ||||
| Other income | 3,234 | 8,246 | ||||||
| Total other expenses, net | (15,813 | ) | (9,218 | ) | ||||
| Income (loss) before income taxes | (35,934 | ) | 113,133 | |||||
| Income tax recovery (provision) | 5,356 | (24,236 | ) | |||||
| Net income (loss) | $ | (30,578 | ) | $ | 88,897 | |||
| Net income (loss) per common share | ||||||||
| Basic | $ | (0.46 | ) | $ | 1.35 | |||
| Diluted | $ | (0.46 | ) | $ | 1.34 | |||
| Dividends declared per common share | $ | 0.0750 | $ | 0.0750 | ||||
| MERCER INTERNATIONAL INC. | ||||||||
| INTERIM CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except share and per share data) | ||||||||
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 300,560 | $ | 354,032 | ||||
| Accounts receivable, net | 345,193 | 351,993 | ||||||
| Inventories | 531,439 | 450,470 | ||||||
| Prepaid expenses and other | 18,651 | 21,680 | ||||||
| Total current assets | 1,195,843 | 1,178,175 | ||||||
| Property, plant and equipment, net | 1,348,563 | 1,341,322 | ||||||
| Investment in joint ventures | 45,466 | 45,635 | ||||||
| Amortizable intangible assets, net | 52,369 | 61,497 | ||||||
| Goodwill | 34,821 | 30,937 | ||||||
| Operating lease right-of-use assets | 15,230 | 15,049 | ||||||
| Pension asset | 3,782 | 4,397 | ||||||
| Other long-term assets | 44,401 | 48,025 | ||||||
| Total assets | $ | 2,740,475 | $ | 2,725,037 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and other | $ | 381,923 | $ | 377,306 | ||||
| Pension and other post-retirement benefit obligations | 755 | 755 | ||||||
| Total current liabilities | 382,678 | 378,061 | ||||||
| Long-term debt | 1,378,531 | 1,346,508 | ||||||
| Pension and other post-retirement benefit obligations | 11,426 | 12,178 | ||||||
| Operating lease liabilities | 9,501 | 9,475 | ||||||
| Other long-term liabilities | 14,170 | 14,072 | ||||||
| Deferred income tax | 121,296 | 125,959 | ||||||
| Total liabilities | 1,917,602 | 1,886,253 | ||||||
| Shareholders’ equity | ||||||||
| Common shares $1 par value; 200,000,000 authorized; 66,421,000 issued and outstanding (2022 – 66,167,000) | 66,386 | 66,132 | ||||||
| Additional paid-in capital | 355,467 | 354,495 | ||||||
| Retained earnings | 562,559 | 598,119 | ||||||
| Accumulated other comprehensive loss | (161,539 | ) | (179,962 | ) | ||||
| Total shareholders’ equity | 822,873 | 838,784 | ||||||
| Total liabilities and shareholders’ equity | $ | 2,740,475 | $ | 2,725,037 | ||||
| MERCER INTERNATIONAL INC. | ||||||||
| INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| (In thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from (used in) operating activities | ||||||||
| Net income (loss) | $ | (30,578 | ) | $ | 88,897 | |||
| Adjustments to reconcile net income (loss) to cash flows from operating activities | ||||||||
| Depreciation and amortization | 47,591 | 32,116 | ||||||
| Deferred income tax provision (recovery) | (9,944 | ) | 8,383 | |||||
| Inventory impairment | 15,200 | — | ||||||
| Defined benefit pension plans and other post-retirement benefit plan expense | 446 | 438 | ||||||
| Stock compensation expense | 1,226 | 949 | ||||||
| Foreign exchange transaction losses (gains) | 270 | (3,828 | ) | |||||
| Other | (1,149 | ) | (801 | ) | ||||
| Defined benefit pension plans and other post-retirement benefit plan contributions | (247 | ) | (1,194 | ) | ||||
| Changes in working capital | ||||||||
| Accounts receivable | 11,342 | (52,127 | ) | |||||
| Inventories | (86,434 | ) | (1,725 | ) | ||||
| Accounts payable and accrued expenses | 309 | (567 | ) | |||||
| Other | 2,318 | (1,731 | ) | |||||
| Net cash from (used in) operating activities | (49,650 | ) | 68,810 | |||||
| Cash flows from (used in) investing activities | ||||||||
| Purchase of property, plant and equipment | (33,429 | ) | (33,293 | ) | ||||
| Property insurance proceeds | — | 6,410 | ||||||
| Purchase of amortizable intangible assets | (16 | ) | (60 | ) | ||||
| Other | 821 | 153 | ||||||
| Net cash from (used in) investing activities | (32,624 | ) | (26,790 | ) | ||||
| Cash flows from (used in) financing activities | ||||||||
| Proceeds from revolving credit facilities, net | 30,102 | 30,504 | ||||||
| Payment of debt issuance costs | — | (1,184 | ) | |||||
| Proceeds from government grants | — | 1,067 | ||||||
| Payment of finance lease obligations | (1,889 | ) | (4,935 | ) | ||||
| Other | (114 | ) | (843 | ) | ||||
| Net cash from (used in) financing activities | 28,099 | 24,609 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 703 | (1,534 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | (53,472 | ) | 65,095 | |||||
| Cash and cash equivalents, beginning of period | 354,032 | 345,610 | ||||||
| Cash and cash equivalents, end of period | $ | 300,560 | $ | 410,705 | ||||
MERCER INTERNATIONAL INC.
COMPUTATION OF OPERATING EBITDA
(Unaudited)
(In thousands)
Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and non-recurring capital 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 non-recurring capital asset impairment charges are not an actual cash cost, 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, we believe 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 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. The following tables set forth the net income (loss) to Operating EBITDA:
| Q1 | Q4 | Q1 | ||||||||||
| 2023 | 2022 | 2022 | ||||||||||
| Net income (loss) | $ | (30,578 | ) | $ | 20,024 | $ | 88,897 | |||||
| Income tax provision (recovery) | (5,356 | ) | 8,608 | 24,236 | ||||||||
| Interest expense | 19,047 | 18,768 | 17,464 | |||||||||
| Other income | (3,234 | ) | (137 | ) | (8,246 | ) | ||||||
| Operating income (loss) | (20,121 | ) | 47,263 | 122,351 | ||||||||
| Add: Depreciation and amortization | 47,591 | 48,865 | 32,116 | |||||||||
| Operating EBITDA | $ | 27,470 | $ | 96,128 | $ | 154,467 | ||||||
