Exceptional people creating bioproducts for a more sustainable world

Quarter 2, 2022 Earnings & HIT acquisition

Juan Carlos Bueno; President & CEO David Ure; SVP, CFO & Secretary

July 29, 2022

Forward-looking Statements

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Certain information included in this presentation contains statements that are forward-looking, such as statements relating to results of operations and financial conditions, market expectations and business development activities, as well as capital spending and financing sources.

Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of Mercer.

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Q2, 2022 Financial and operating highlights

Constructive end product pricing, rising USD are offsetting inflationary pressure

Cashflows supporting ambitious capex program and HIT acquisition

Steady, solid EBITDA

  • $145M in Q2
  • A new wood products record at $49M

Planned maintenance

  • Most ambitious maintenance quarter of the year now complete - 43 days of downtime in Q2

Stable market conditions

  • Sequential price increases for pulp and lumber across all markets in Q2
  • NBSK up $100/tonne in Europe, $147 in China
  • WSPF down in NA, but European pricing higher
  • European electricity prices remain over $200/MWh
  • Strong USD

Cash & liquidity, capital allocation

  • Cashflow in the quarter of $85M pushes balance to $495M
  • Up to $275M of cash will be deployed in Q2 to complete HIT acquisition

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Market conditions; Executing the strategy

Execution of the capex plan

Stendal pulpmill returns to operation

HIT acquisition - strategy execution

Market conditions

  • Pulp: Tepid underlying demand in China offset by solid demand in Western economies and disruptions in supply of NBSK; unplanned outages and shipping restrictions

• despite falling housing starts, inventories remain low and pent up demand persists

  • Electricity: elevated with limited options for near-term moderation

Executing capital expenditure plan

  • Woodrooms at Celgar, Peace River

• Friesau sorting capacity increases

  • Stendal capacity increase to 740,000 tonnes
  • Spokane mass timber plant expansion

2021 Sustainability Report

Quick recovery from the Stendal fire

• Mill returned to production this week

• Longer term reconstruction of conveyor system will take several months

  • Time to return to full-capacity production tbd
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HIT acquisition

  • integrated sawmill and value-add pallet production facility in Torgau, Germany
  • Key products include lumber and wood pallets, biofuels, and energy
  • €270 million ($~275.4 million) purchase price, inclusive of forecasted net working capital of ~€43 million (~$43.9 million)
  • Transaction is anticipated to close in Q3 or early Q4, 2022

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Mercer International Inc. published this content on 28 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2022 21:19:12 UTC.