MERC 8-K
Mercer International Inc. (MERC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of Registrant as Specified in Its Charter)
|
|
|
|
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
(Address of Principal Executive Offices)
Registrant’s Telephone Number, Including Area Code:
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
|
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
|
|
|
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
The information furnished under Item 2.02 of this Current Report shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
On February 16, 2021 Mercer International Inc. (the “Company”) announced by press release the Company’s results for its fourth quarter ended December 31, 2020. A copy of such press release is furnished as Exhibit 99.1 to this Current Report.
Item 8.01. Other Events
On February 16, 2021, the Company announced by press release that its board of directors had authorized a quarterly cash dividend of $0.065 per share to be paid on April 7, 2021 to all shareholders of record on March 31, 2021. A copy of such press release is furnished as Exhibit 99.1 to this Current Report.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
|
Exhibit Number |
|
Description |
|
99.1 |
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
MERCER INTERNATIONAL INC. |
||
|
|
|
|
|
|
|
Date: February 16, 2021 |
|
By: |
/s/ David K. Ure |
|
|
|
|
|
David K. Ure |
|
|
|
|
|
Chief Financial Officer |
|
2
EXHIBIT 99.1
For Immediate Release
MERCER INTERNATIONAL INC. REPORTS FOURTH QUARTER AND YEAR END 2020 RESULTS AND ANNOUNCES QUARTERLY CASH DIVIDEND OF $0.065
Selected Highlights
|
|
• |
Record quarterly and annual wood products segment results |
|
|
• |
Fourth quarter Operating EBITDA* of $49.5 million and net loss of $13.0 million |
|
|
• |
2020 annual Operating EBITDA of $192.7 million and net loss of $17.2 million ($0.26 per diluted share) |
NEW YORK, NY, February 16, 2021 ‑ Mercer International Inc. (Nasdaq: MERC) today reported fourth quarter 2020 Operating EBITDA increased to $49.5 million from negative $34.2 million in the fourth quarter of 2019 and $45.6 million in the third quarter of 2020.
In the fourth quarter of 2020, net loss was $13.0 million (or $0.20 per share) compared to a net loss of $72.7 million (or $1.11 per share) in the fourth quarter of 2019 and net income of $7.5 million (or $0.11 per share) in the third quarter of 2020.
In 2020, Operating EBITDA decreased by 8% to $192.7 million from $210.4 million in 2019 and the net loss was $17.2 million (or $0.26 per share) compared to $9.6 million (or $0.15 per share) in 2019.
Mr. David Gandossi, the Chief Executive Officer, stated: “All of our mills ran well in the fourth quarter. Our Rosenthal and Peace River mills successfully and safely completed a total of 16 days of annual maintenance downtime. Our recent capital investment in our Friesau sawmill continues to pay dividends in the form of record quarterly operating income of $12.9 million in the fourth quarter.
Our fourth quarter results are highlighted by improved pulp pricing and moderately lower fiber costs, as well as steady production. Fourth quarter average European NBSK list prices were up $40 per ADMT, and average net
____________________
*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.
Page 2
prices in China were up $65 per ADMT compared to the third quarter. Pulp market fundamentals continued to improve in the fourth quarter allowing us to achieve record sales volumes.
Our wood products segment had record operating results this quarter and benefited from strong demand and robust pricing in the U.S. market. In the current quarter approximately 56% of lumber revenues and 37% of our lumber sales volumes were to the U.S. which was our single largest market.
In the first quarter of 2021, our pulp mills have 20 days of planned annual maintenance downtime (approximately 27,600 ADMTs).
In January 2021, we issued $875 million of 5.125% senior notes due 2029 to refinance and repay all $250 million of our 6.5% senior notes due 2024 and all $550 million of our 7.375% senior notes due 2025. This transaction reduces our cost of capital and extends the maturity of our senior note debt to 2026 at the earliest. After giving effect to the transaction, going forward it will reduce our annual interest expense by approximately $12 million.
While I am pleased that COVID-19 vaccines are beginning to be administered globally, it will be some time before the pandemic is behind us. In late 2020, there was a second wave in reported infections in Europe, the United States and Canada, as well as the emergence of new variants of the virus. As such, we remain committed to maintaining measures and procedures to operate our business safely and efficiently and protect our people.
Looking ahead to 2021, we are encouraged by the improving fundamentals in pulp demand and markets and continued price increases implemented in 2021 to date. Along with continuing strong lumber markets and our ample liquidity position, we are positioned well to execute our strategic plan in 2021.”
Consolidated Financial Results
|
|
Q4 |
|
|
Q3 |
|
|
Q4 |
|
|
YTD |
|
|
YTD |
|
|||||
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
|
(in thousands, except per share amounts) |
|
|||||||||||||||||
|
Revenues |
$ |
398,195 |
|
|
$ |
333,151 |
|
|
$ |
331,172 |
|
|
$ |
1,423,140 |
|
|
$ |
1,624,411 |
|
|
Operating income (loss) |
$ |
15,616 |
|
|
$ |
13,736 |
|
|
$ |
(66,106 |
) |
|
$ |
63,729 |
|
|
$ |
84,003 |
|
|
Operating EBITDA |
$ |
49,506 |
|
|
$ |
45,620 |
|
|
$ |
(34,159 |
) |
|
$ |
192,650 |
|
|
$ |
210,397 |
|
|
Net income (loss) |
$ |
(12,977 |
) |
|
$ |
7,545 |
|
|
$ |
(72,721 |
) |
|
$ |
(17,235 |
) |
|
$ |
(9,639 |
) |
|
Net income (loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.20 |
) |
|
$ |
0.11 |
|
|
$ |
(1.11 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.15 |
) |
Page 3
Consolidated – Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019
Total revenues for the three months ended December 31, 2020 increased by approximately 20% to $398.2 million from $331.2 million in the same quarter of 2019 primarily due to higher pulp and energy sales volumes and higher lumber sales realizations.
Costs and expenses in the current quarter decreased by approximately 4% to $382.6 million from $397.3 million in the fourth quarter of 2019 primarily due to lower annual maintenance costs and per unit fiber costs partially offset by higher pulp sales volumes and the negative impact of a weaker dollar on our euro and Canadian dollar denominated costs and expenses. The fourth quarter of 2019 included the reversal of $13.7 million in accrued wastewater fees as a result of completing certain approved capital projects.
In the fourth quarter of 2020, Operating EBITDA increased to $49.5 million from negative $34.2 million in the same quarter of 2019 primarily due to lower annual maintenance costs, lower per unit fiber costs, higher pulp and energy sales volumes and higher lumber sales realizations.
Segment Results
Pulp: Record quarterly pulp sales volumes and lower annual maintenance and fiber costs
|
|
Three Months Ended December 31, |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
|
|
(in thousands) |
|
|||||
|
Pulp revenues |
$ |
321,379 |
|
|
$ |
275,517 |
|
|
Energy and chemical revenues |
$ |
22,698 |
|
|
$ |
15,273 |
|
|
Operating income (loss) |
$ |
4,650 |
|
|
$ |
(66,574 |
) |
Pulp segment operating income increased to $4.7 million in the fourth quarter of 2020 compared to an operating loss of $66.6 million in the same quarter of 2019 due to lower annual maintenance and per unit fiber costs and higher pulp and energy sales volumes.
In the fourth quarter of 2020, our pulp sales realizations were flat at $588 per ADMT from $581 per ADMT in the same quarter of the prior year. NBSK sales volumes increased by approximately 13% to a record 469,544 ADMTs in the current quarter from 416,569 ADMTs in the same quarter of 2019 primarily due to lower annual maintenance downtime. In the current quarter of 2020, our pulp mills had 16 days of annual maintenance downtime (approximately 21,500 ADMTs). In the comparative quarter of 2019, our pulp mills had 54 days of annual maintenance downtime (approximately 86,500 ADMTs). We estimate that such downtime in the fourth quarter of 2020 adversely impacted our operating income by approximately $14.7 million, comprised of approximately $9.4 million in direct out-of-pocket expenses and the balance in reduced production. Many of our competitors that report their results using International Financial Reporting Standards capitalize their direct costs of maintenance downtime.
Page 4
In the fourth quarter of 2020, per unit fiber costs decreased by approximately 19% from the same quarter of 2019 due to lower per unit fiber costs for all of our mills. In Germany, per unit fiber costs benefited from the continuing availability of beetle damaged wood. In Canada, per unit fiber costs declined due to increased sawmill activity but remained at historically high levels due to strong demand in the mills’ fiber procurement areas.
Wood Products: Record operating income driven by strong demand
|
|
Three Months Ended December 31, |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
|
|
(in thousands) |
|
|||||
|
Lumber revenues |
$ |
48,560 |
|
|
$ |
35,071 |
|
|
Energy revenues |
$ |
3,133 |
|
|
$ |
2,646 |
|
|
Wood residual revenues |
$ |
1,398 |
|
|
$ |
1,871 |
|
|
Operating income |
$ |
12,859 |
|
|
$ |
5,274 |
|
In the fourth quarter of 2020, our wood products segment had record operating income of $12.9 million compared to $5.3 million in the same quarter of 2019 primarily due to higher realized sales prices.
Average lumber sales realizations increased by approximately 35% to $467 per Mfbm in the fourth quarter of 2020 compared to approximately $347 per Mfbm in the same quarter of 2019 primarily due to higher pricing in the U.S. market. U.S. lumber pricing increased due to strong demand in the fourth quarter of 2020 from the U.S. housing and renovation markets. European lumber pricing modestly increased in the quarter due to steady demand with limited supply.
Per unit fiber costs decreased by approximately 5% in the fourth quarter of 2020 from the same quarter of 2019 primarily as a result of the continuing availability of beetle damaged wood.
Consolidated – Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
Total revenues in 2020 decreased by approximately 12% to $1,423.1 million from $1,624.4 million in 2019 primarily due to lower pulp sales realizations and pulp sales volumes partially offset by higher lumber sales realizations and lumber sales volumes.
Costs and expenses in 2020 decreased by approximately 12% to $1,359.4 million from $1,540.4 million in 2019 primarily due to lower per unit fiber costs, maintenance costs and pulp sales volumes. 2019 costs and expenses included a reversal of $20.9 million in accrued wastewater fees at our German pulp mills.
In 2020, we had $5.9 million of other income primarily due to a $17.5 million gain on the sale of investments partially offset by a $13.8 million foreign exchange loss primarily on the translation of dollar denominated cash held
Page 5
at our mills as the dollar weakened at the end of 2020. In 2019, we had $6.1 million of other income primarily due to interest earned on cash.
In 2020, Operating EBITDA decreased by approximately 8% to $192.7 million from $210.4 million in 2019 as lower pulp sales realizations were only partially offset by lower per unit fiber costs, lower maintenance costs and higher lumber sales realizations.
Segment Results
Pulp
|
|
Year Ended December 31, |
|
|
|||||
|
|
2020 |
|
|
2019 |
|
|
||
|
|
(in thousands) |
|
|
|||||
|
Pulp revenues |
$ |
1,130,302 |
|
|
$ |
1,370,742 |
|
|
|
Energy and chemical revenues |
$ |
90,342 |
|
|
$ |
86,381 |
|
|
|
Depreciation and amortization |
$ |
115,945 |
|
|
$ |
117,108 |
|
|
|
Operating income |
$ |
37,952 |
|
|
$ |
90,583 |
|
|
Wood Products
|
|
Year Ended December 31, |
|
|
|||||
|
|
2020 |
|
|
2019 |
|
|
||
|
|
(in thousands) |
|
|
|||||
|
Lumber revenues |
$ |
180,769 |
|
|
$ |
142,243 |
|
|
|
Energy revenues |
$ |
10,619 |
|
|
$ |
9,721 |
|
|
|
Wood residual revenues |
$ |
6,261 |
|
|
$ |
7,973 |
|
|
|
Depreciation and amortization |
$ |
12,212 |
|
|
$ |
7,966 |
|
|
|
Operating income |
$ |
34,704 |
|
|
$ |
7,349 |
|
|
Liquidity
The following table is a summary of selected financial information as of the dates indicated:
|
|
December 31, |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
|
|
(in thousands) |
|
|||||
|
Cash and cash equivalents |
$ |
361,098 |
|
|
$ |
351,085 |
|
|
Working capital |
$ |
663,056 |
|
|
$ |
588,385 |
|
|
Total assets |
$ |
2,129,126 |
|
|
$ |
2,065,720 |
|
|
Long-term liabilities |
$ |
1,316,303 |
|
|
$ |
1,259,005 |
|
|
Total shareholders' equity |
$ |
601,027 |
|
|
$ |
550,403 |
|
As of December 31, 2020, we had cash and cash equivalents of approximately $361.1 million, approximately $266.8 million available under our revolving credit facilities, providing aggregate liquidity of about $627.9 million.
Current Market Environment
In January 2021, published NBSK list prices increased $50 per ADMT in Europe, and $30 per ADMT in North America and net prices increased $100 per ADMT in China. Although there is continued economic uncertainty as a
Page 6
result of the COVID-19 pandemic, based on the recent NBSK price increases and an improving supply demand balance, we are currently expecting stable pulp demand and modestly improving prices during the course of 2021.
In our lumber segment, going into 2021 we currently expect continued strong lumber demand and prices in the U.S. market along with modestly improving sales realizations in the European market.
Quarterly Dividend
A quarterly dividend of $0.065 per share will be paid on April 7, 2021 to all shareholders of record on March 31, 2021. 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 17, 2021 at 10:00 AM (Eastern Standard Time). Listeners can access the conference call live and archived for 30 days over the Internet at https://edge.media-server.com/mmc/p/4hyqmsx9 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 and Canada with consolidated annual production capacity of 2.2 million tonnes of pulp and 550 million board feet of lumber. 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", "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.
Page 7
Jimmy S.H. Lee
Executive Chairman
(604) 684-1099
David M. Gandossi, FCPA, FCA
Chief Executive Officer
(604) 684-1099
-FINANCIAL TABLES FOLLOW-
|
|
Q4 |
|
|
Q3 |
|
|
Q4 |
|
|
YTD |
|
|
YTD |
|
|||||
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
|
(in thousands, except per share amounts) |
|
|||||||||||||||||
|
Pulp segment revenues |
$ |
344,077 |
|
|
$ |
274,916 |
|
|
$ |
290,790 |
|
|
$ |
1,220,644 |
|
|
$ |
1,457,123 |
|
|
Wood products segment revenues |
|
53,091 |
|
|
|
57,053 |
|
|
|
39,588 |
|
|
|
197,649 |
|
|
|
159,937 |
|
|
Corporate and other revenues |
|
1,027 |
|
|
|
1,182 |
|
|
|
794 |
|
|
|
4,847 |
|
|
|
7,351 |
|
|
Total revenues |
$ |
398,195 |
|
|
$ |
333,151 |
|
|
$ |
331,172 |
|
|
$ |
1,423,140 |
|
|
$ |
1,624,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment operating income (loss) |
$ |
4,650 |
|
|
$ |
3,753 |
|
|
$ |
(66,574 |
) |
|
$ |
37,952 |
|
|
$ |
90,583 |
|
|
Wood products segment operating income |
|
12,859 |
|
|
|
11,963 |
|
|
|
5,274 |
|
|
|
34,704 |
|
|
|
7,349 |
|
|
Corporate and other operating loss |
|
(1,893 |
) |
|
|
(1,980 |
) |
|
|
(4,806 |
) |
|
|
(8,927 |
) |
|
|
(13,929 |
) |
|
Total operating income (loss) |
$ |
15,616 |
|
|
$ |
13,736 |
|
|
$ |
(66,106 |
) |
|
$ |
63,729 |
|
|
$ |
84,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment depreciation and amortization |
$ |
30,104 |
|
|
$ |
28,251 |
|
|
$ |
29,492 |
|
|
$ |
115,945 |
|
|
$ |
117,108 |
|
|
Wood products segment depreciation and amortization |
|
3,585 |
|
|
|
3,446 |
|
|
|
2,029 |
|
|
|
12,212 |
|
|
|
7,966 |
|
|
Corporate and other depreciation and amortization |
|
201 |
|
|
|
187 |
|
|
|
426 |
|
|
|
764 |
|
|
|
1,320 |
|
|
Total depreciation and amortization |
$ |
33,890 |
|
|
$ |
31,884 |
|
|
$ |
31,947 |
|
|
$ |
128,921 |
|
|
$ |
126,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating EBITDA |
$ |
49,506 |
|
|
$ |
45,620 |
|
|
$ |
(34,159 |
) |
|
$ |
192,650 |
|
|
$ |
210,397 |
|
|
Income tax recovery (provision) |
$ |
(1,645 |
) |
|
$ |
1,775 |
|
|
$ |
15,875 |
|
|
$ |
(6,096 |
) |
|
$ |
(19,226 |
) |
|
Net income (loss) |
$ |
(12,977 |
) |
|
$ |
7,545 |
|
|
$ |
(72,721 |
) |
|
$ |
(17,235 |
) |
|
$ |
(9,639 |
) |
|
Net income (loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.20 |
) |
|
$ |
0.11 |
|
|
$ |
(1.11 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.15 |
) |
|
Common shares outstanding at period end |
|
65,868 |
|
|
|
65,868 |
|
|
|
65,629 |
|
|
|
65,868 |
|
|
|
65,629 |
|
(1)
____________________
*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.
Summary Operating Highlights
|
|
Q4 |
|
|
Q3 |
|
|
Q4 |
|
|
YTD |
|
|
YTD |
|
|||||
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Pulp Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp production ('000 ADMTs) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
436.9 |
|
|
|
400.2 |
|
|
|
381.3 |
|
|
|
1,716.1 |
|
|
|
1,736.4 |
|
|
NBHK |
|
87.4 |
|
|
|
79.8 |
|
|
|
60.9 |
|
|
|
335.0 |
|
|
|
304.2 |
|
|
Annual maintenance downtime ('000 ADMTs) |
|
21.5 |
|
|
|
15.0 |
|
|
|
86.5 |
|
|
|
50.1 |
|
|
|
108.1 |
|
|
Annual maintenance downtime (days) |
|
16 |
|
|
|
10 |
|
|
|
54 |
|
|
|
43 |
|
|
|
82 |
|
|
Pulp sales ('000 ADMTs) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
469.5 |
|
|
|
369.9 |
|
|
|
416.6 |
|
|
|
1,700.4 |
|
|
|
1,773.2 |
|
|
NBHK |
|
93.6 |
|
|
|
100.1 |
|
|
|
65.3 |
|
|
|
329.0 |
|
|
|
325.7 |
|
|
Average NBSK pulp prices ($/ADMT)(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
880 |
|
|
|
840 |
|
|
|
822 |
|
|
|
851 |
|
|
|
946 |
|
|
China |
|
637 |
|
|
|
572 |
|
|
|
563 |
|
|
|
588 |
|
|
|
612 |
|
|
North America |
|
1,138 |
|
|
|
1,133 |
|
|
|
1,115 |
|
|
|
1,139 |
|
|
|
1,239 |
|
|
Average NBHK pulp prices ($/ADMT)(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China |
|
480 |
|
|
|
443 |
|
|
|
455 |
|
|
|
462 |
|
|
|
558 |
|
|
North America |
|
868 |
|
|
|
868 |
|
|
|
893 |
|
|
|
881 |
|
|
|
1,036 |
|
|
Average pulp sales realizations ($/ADMT)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NBSK |
|
588 |
|
|
|
562 |
|
|
|
581 |
|
|
|
572 |
|
|
|
663 |
|
|
NBHK |
|
454 |
|
|
|
424 |
|
|
|
476 |
|
|
|
452 |
|
|
|
567 |
|
|
Energy production ('000 MWh)(3) |
|
568.1 |
|
|
|
529.2 |
|
|
|
432.9 |
|
|
|
2,238.6 |
|
|
|
2,141.2 |
|
|
Energy sales ('000 MWh)(3) |
|
225.3 |
|
|
|
215.5 |
|
|
|
154.5 |
|
|
|
894.5 |
|
|
|
822.8 |
|
|
Average energy sales realizations ($/MWh)(3) |
|
96 |
|
|
|
96 |
|
|
|
88 |
|
|
|
93 |
|
|
|
91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood Products Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lumber production (MMfbm) |
|
111.4 |
|
|
|
96.8 |
|
|
|
106.7 |
|
|
|
438.0 |
|
|
|
414.7 |
|
|
Lumber sales (MMfbm) |
|
104.0 |
|
|
|
118.5 |
|
|
|
101.1 |
|
|
|
449.2 |
|
|
|
408.8 |
|
|
Average lumber sales realizations ($/Mfbm) |
|
467 |
|
|
453 |
|
|
347 |
|
|
|
402 |
|
|
348 |
|
|||
|
Energy production and sales ('000 MWh) |
|
25.7 |
|
|
|
17.8 |
|
|
|
23.1 |
|
|
|
89.0 |
|
|
|
83.5 |
|
|
Average energy sales realizations ($/MWh) |
|
122 |
|
|
125 |
|
|
114 |
|
|
|
119 |
|
|
116 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Spot Currency Exchange Rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ / €(4) |
|
1.1925 |
|
|
|
1.1698 |
|
|
|
1.1075 |
|
|
|
1.1410 |
|
|
1.1194 |
|
|
|
$ / C$(4) |
|
0.7675 |
|
|
0.7508 |
|
|
|
0.7578 |
|
|
|
0.7457 |
|
|
0.7537 |
|
||
______________
|
(1) |
Source: RISI pricing report. Europe and North America are list prices. China are net prices which include discounts, allowances and rebates. Effective January 2020, the RISI pricing report does not provide list prices for China. |
|
(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) |
Average Federal Reserve Bank of New York Noon Buying Rates over the reporting period. |
(2)
MERCER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
|
|
Three Months Ended December 31, |
|
|
For the Year Ended December 31, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Revenues |
$ |
398,195 |
|
|
$ |
331,172 |
|
|
$ |
1,423,140 |
|
|
$ |
1,624,411 |
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales, excluding depreciation and amortization |
|
331,173 |
|
|
|
346,020 |
|
|
|
1,163,727 |
|
|
|
1,340,380 |
|
|
Cost of sales depreciation and amortization |
|
33,865 |
|
|
|
31,693 |
|
|
|
128,817 |
|
|
|
125,801 |
|
|
Selling, general and administrative expenses |
|
17,541 |
|
|
|
19,565 |
|
|
|
66,867 |
|
|
|
74,227 |
|
|
Operating income (loss) |
|
15,616 |
|
|
|
(66,106 |
) |
|
|
63,729 |
|
|
|
84,003 |
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(20,690 |
) |
|
|
(20,647 |
) |
|
|
(80,746 |
) |
|
|
(75,750 |
) |
|
Loss on settlement of debt |
|
— |
|
|
|
(4,750 |
) |
|
|
— |
|
|
|
(4,750 |
) |
|
Other income (expenses) |
|
(6,258 |
) |
|
|
2,907 |
|
|
|
5,878 |
|
|
|
6,084 |
|
|
Total other expenses, net |
|
(26,948 |
) |
|
|
(22,490 |
) |
|
|
(74,868 |
) |
|
|
(74,416 |
) |
|
Income (loss) before income taxes |
|
(11,332 |
) |
|
|
(88,596 |
) |
|
|
(11,139 |
) |
|
|
9,587 |
|
|
Income tax recovery (provision) |
|
(1,645 |
) |
|
|
15,875 |
|
|
|
(6,096 |
) |
|
|
(19,226 |
) |
|
Net loss |
$ |
(12,977 |
) |
|
$ |
(72,721 |
) |
|
$ |
(17,235 |
) |
|
$ |
(9,639 |
) |
|
Net loss per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.20 |
) |
|
$ |
(1.11 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.15 |
) |
|
Dividends declared per common share |
$ |
0.0650 |
|
|
$ |
0.1375 |
|
|
$ |
0.3325 |
|
|
$ |
0.5375 |
|
(3)
MERCER INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
|
|
|
December 31, |
|
|||||
|
|
|
2020 |
|
|
2019 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
361,098 |
|
|
$ |
351,085 |
|
|
Accounts receivable, net |
|
|
227,055 |
|
|
|
208,740 |
|
|
Inventories |
|
|
271,696 |
|
|
|
272,599 |
|
|
Prepaid expenses and other |
|
|
15,003 |
|
|
|
12,273 |
|
|
Total current assets |
|
|
874,852 |
|
|
|
844,697 |
|
|
Property, plant and equipment, net |
|
|
1,109,740 |
|
|
|
1,074,242 |
|
|
Investment in joint ventures |
|
|
46,429 |
|
|
|
53,122 |
|
|
Amortizable intangible assets, net |
|
|
51,571 |
|
|
|
53,371 |
|
|
Operating lease right-of-use assets |
|
|
13,251 |
|
|
|
13,004 |
|
|
Other long-term assets |
|
|
31,928 |
|
|
|
26,038 |
|
|
Deferred income tax |
|
|
1,355 |
|
|
|
1,246 |
|
|
Total assets |
|
$ |
2,129,126 |
|
|
$ |
2,065,720 |
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable and other |
|
$ |
210,994 |
|
|
$ |
255,544 |
|
|
Pension and other post-retirement benefit obligations |
|
|
802 |
|
|
|
768 |
|
|
Total current liabilities |
|
|
211,796 |
|
|
|
256,312 |
|
|
Debt |
|
|
1,145,294 |
|
|
|
1,087,932 |
|
|
Pension and other post-retirement benefit obligations |
|
|
31,810 |
|
|
|
25,489 |
|
|
Finance lease liabilities |
|
|
41,329 |
|
|
|
31,103 |
|
|
Operating lease liabilities |
|
|
9,933 |
|
|
|
10,520 |
|
|
Other long-term liabilities |
|
|
10,909 |
|
|
|
14,114 |
|
|
Deferred income tax |
|
|
77,028 |
|
|
|
89,847 |
|
|
Total liabilities |
|
|
1,528,099 |
|
|
|
1,515,317 |
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
|
|
Common shares $1 par value; 200,000,000 authorized; 65,868,000 issued and outstanding (2019 – 65,629,000) |
|
|
65,800 |
|
|
|
65,598 |
|
|
Additional paid-in capital |
|
|
345,696 |
|
|
|
344,994 |
|
|
Retained earnings |
|
|
217,106 |
|
|
|
256,371 |
|
|
Accumulated other comprehensive loss |
|
|
(27,575 |
) |
|
|
(116,560 |
) |
|
Total shareholders’ equity |
|
|
601,027 |
|
|
|
550,403 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
2,129,126 |
|
|
$ |
2,065,720 |
|
(4)
MERCER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
|
For the Year Ended December 31, |
|
|||||||||
|
|
|
2020 |
|
|
2019 |
|
|
2018 |
|
|||
|
Cash flows from (used in) operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(17,235 |
) |
|
$ |
(9,639 |
) |
|
$ |
128,589 |
|
|
Adjustments to reconcile net income (loss) to cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
128,921 |
|
|
|
126,394 |
|
|
|
96,729 |
|
|
Deferred income tax provision (recovery) |
|
|
(15,249 |
) |
|
|
(7,873 |
) |
|
|
16,596 |
|
|
Inventory impairment |
|
|
25,998 |
|
|
|
9,200 |
|
|
|
— |
|
|
Loss on settlement of debt |
|
|
— |
|
|
|
4,750 |
|
|
|
21,515 |
|
|
Defined benefit pension plans and other post-retirement benefit plan expense |
|
|
3,053 |
|
|
|
3,449 |
|
|
|
1,868 |
|
|
Stock compensation expense |
|
|
928 |
|
|
|
3,036 |
|
|
|
3,940 |
|
|
Gain on sale of investments |
|
|
(17,540 |
) |
|
|
— |
|
|
|
— |
|
|
Foreign exchange transaction losses |
|
|
13,272 |
|
|
|
7,116 |
|
|
|
746 |
|
|
Other |
|
|
543 |
|
|
|
5,834 |
|
|
|
2,419 |
|
|
Defined benefit pension plans and other post-retirement benefit plan contributions |
|
|
(4,164 |
) |
|
|
(4,467 |
) |
|
|
(1,133 |
) |
|
Changes in working capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(6,269 |
) |
|
|
41,369 |
|
|
|
(10,370 |
) |
|
Inventories |
|
|
(11,430 |
) |
|
|
24,683 |
|
|
|
(58,082 |
) |
|
Accounts payable and accrued expenses |
|
|
(53,744 |
) |
|
|
45,256 |
|
|
|
37,959 |
|
|
Other |
|
|
(5,519 |
) |
|
|
(4,825 |
) |
|
|
(4,108 |
) |
|
Net cash from (used in) operating activities |
|
|
41,565 |
|
|
|
244,283 |
|
|
|
236,668 |
|
|
Cash flows from (used in) investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(78,518 |
) |
|
|
(132,034 |
) |
|
|
(87,012 |
) |
|
Purchase of amortizable intangible assets |
|
|
(647 |
) |
|
|
(623 |
) |
|
|
(600 |
) |
|
Acquisitions |
|
|
— |
|
|
|
(6,380 |
) |
|
|
(380,312 |
) |
|
Purchase of investments |
|
|
(9,370 |
) |
|
|
— |
|
|
|
— |
|
|
Proceeds from sale of investments |
|
|
26,910 |
|
|
|
— |
|
|
|
— |
|
|
Other |
|
|
1,798 |
|
|
|
(321 |
) |
|
|
445 |
|
|
Net cash from (used in) investing activities |
|
|
(59,827 |
) |
|
|
(139,358 |
) |
|
|
(467,479 |
) |
|
Cash flows from (used in) financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption of senior notes |
|
|
— |
|
|
|
(103,875 |
) |
|
|
(317,439 |
) |
|
Proceeds from issuance of senior notes |
|
|
— |
|
|
|
205,500 |
|
|
|
350,000 |
|
|
Proceeds from (repayment of) revolving credit facilities, net |
|
|
52,651 |
|
|
|
(58,404 |
) |
|
|
36,560 |
|
|
Dividend payments |
|
|
(21,892 |
) |
|
|
(35,279 |
) |
|
|
(40,724 |
) |
|
Repurchase of common shares |
|
|
(162 |
) |
|
|
(754 |
) |
|
|
— |
|
|
Payment of debt issuance costs |
|
|
— |
|
|
|
(4,213 |
) |
|
|
(10,074 |
) |
|
Proceeds from government grants |
|
|
362 |
|
|
|
6,467 |
|
|
|
— |
|
|
Other |
|
|
(4,642 |
) |
|
|
(3,344 |
) |
|
|
(3,462 |
) |
|
Net cash from (used in) financing activities |
|
|
26,317 |
|
|
|
6,098 |
|
|
|
14,861 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
1,958 |
|
|
|
(429 |
) |
|
|
(4,297 |
) |
|
Net increase (decrease) in cash and cash equivalents |
|
|
10,013 |
|
|
|
110,594 |
|
|
|
(220,247 |
) |
|
Cash and cash equivalents, beginning of year |
|
|
351,085 |
|
|
|
240,491 |
|
|
|
460,738 |
|
|
Cash and cash equivalents, end of year |
|
$ |
361,098 |
|
|
$ |
351,085 |
|
|
$ |
240,491 |
|
(5)
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:
|
|
Q4 |
|
|
Q3 |
|
|
Q4 |
|
|
YTD |
|
|
YTD |
|
|||||
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
|
Net income (loss) |
$ |
(12,977 |
) |
|
$ |
7,545 |
|
|
$ |
(72,721 |
) |
|
$ |
(17,235 |
) |
|
$ |
(9,639 |
) |
|
Income tax provision (recovery) |
|
1,645 |
|
|
|
(1,775 |
) |
|
|
(15,875 |
) |
|
|
6,096 |
|
|
|
19,226 |
|
|
Interest expense |
|
20,690 |
|
|
|
19,864 |
|
|
|
20,647 |
|
|
|
80,746 |
|
|
|
75,750 |
|
|
Loss on settlement of debt |
|
— |
|
|
|
— |
|
|
|
4,750 |
|
|
|
— |
|
|
|
4,750 |
|
|
Other (income) expenses |
|
6,258 |
|
|
|
(11,898 |
) |
|
|
(2,907 |
) |
|
|
(5,878 |
) |
|
|
(6,084 |
) |
|
Operating income (loss) |
|
15,616 |
|
|
|
13,736 |
|
|
|
(66,106 |
) |
|
|
63,729 |
|
|
|
84,003 |
|
|
Add: Depreciation and amortization |
|
33,890 |
|
|
|
31,884 |
|
|
|
31,947 |
|
|
|
128,921 |
|
|
|
126,394 |
|
|
Operating EBITDA |
$ |
49,506 |
|
|
$ |
45,620 |
|
|
$ |
(34,159 |
) |
|
$ |
192,650 |
|
|
$ |
210,397 |
|
(6)