Selected Highlights
Mercer International Inc. (Nasdaq: MERC) today reported strong
results for the third quarter ended September 30, 2018 due to
higher pulp sales realizations. Operating EBITDA in the current
quarter was $86.7 million compared to $64.3 million in the third
quarter of 2017 and $60.5 million in the second quarter of 2018.
For the third quarter of 2018, net income was
$41.2 million, or $0.63 per share, compared to net income of $21.1
million, or $0.33 per basic and $0.32 per diluted share, for the
third quarter of 2017 and $16.8 million, or $0.26 per share, in the
prior quarter of 2018.
Mr. David M. Gandossi, the Chief Executive
Officer, stated: "Our agreements to acquire Daishowa-Marubeni
International Ltd. and the Santanol sandalwood business reflect our
disciplined approach to acquisitions and capital allocation. Both
advance our long-term value creation strategy to deliver
sustainable profitable growth. These businesses leverage our core
competencies and complement the world-class assets that comprise
Mercer’s platform for growth.
Our third quarter performance reflected modestly
higher average pulp prices and the absence of the scheduled
downtime we took in the second quarter to implement productivity
upgrades at Celgar. While the ramp-up of this new equipment
negatively affected production early in the third quarter, the mill
is now meeting our performance objectives. We also took significant
downtime in our lumber business in the third quarter, completing
important upgrades to our large saw line and installing a new
auto-grader in the existing planer mill. These capital investments
have increased production, optimized lumber grading and reflect our
commitment to continuous improvements in our plant, equipment and
operations.
Global pulp markets remained steady throughout
the quarter, while our third quarter lumber realizations were
negatively impacted by weaker demand in the U.S. market, where
approximately 25% of our lumber is sold.”
*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 to Operating EBITDA.
Financial
Highlights
Consolidated: Stable pulp prices
and a focus on continuous improvement
|
Q3 |
|
Q2 |
|
Q3 |
|
YTD |
|
YTD |
|
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
(in thousands, except per share
amounts) |
|
Revenues |
$ |
331,058 |
|
|
$ |
346,532 |
|
|
$ |
305,498 |
|
|
$ |
1,045,493 |
|
|
$ |
831,459 |
|
|
Operating
income |
$ |
63,346 |
|
|
$ |
37,476 |
|
|
$ |
41,662 |
(1) |
|
$ |
176,870 |
|
|
$ |
101,871 |
(1) |
|
Operating
EBITDA |
$ |
86,656 |
|
|
$ |
60,490 |
|
|
$ |
64,335 |
(1) |
|
$ |
246,513 |
|
|
$ |
164,390 |
(1) |
|
Loss on
settlement of debt |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
21,515 |
(2) |
|
$ |
10,696 |
(3) |
|
Legal cost
award |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
6,951 |
|
|
$ |
— |
|
|
Net
income |
$ |
41,176 |
|
|
$ |
16,755 |
|
|
$ |
21,143 |
|
|
$ |
83,580 |
|
|
$ |
28,765 |
|
|
Net income
per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.63 |
|
|
$ |
0.26 |
|
|
$ |
0.33 |
|
|
$ |
1.28 |
|
|
$ |
0.44 |
|
|
Diluted |
$ |
0.63 |
|
|
$ |
0.26 |
|
|
$ |
0.32 |
|
|
$ |
1.27 |
|
|
$ |
0.44 |
|
|
(1) Adjusted
as a result of our adoption of Accounting Standards Update 2017-07,
Improving the Presentation of Net Periodic Pension Cost and Net
Periodic Post-Retirement Benefit Cost, in the current year. See
Note 1 to our Interim Consolidated Financial Statements.(2)
Redemption of 7.75% senior notes due 2022.(3) Redemption of
7.00% senior notes due 2019.
In the third quarter of 2018 our operating
income increased to $63.3 million, or by approximately 69% from
$37.5 million in the prior quarter of 2018, and approximately 52%
from $41.7 million in the same quarter of the prior year. The
increase in the current quarter over the prior quarter is primarily
due to lower maintenance costs at our pulp mills and higher pulp
sales realizations. The increase in the current quarter over the
same quarter of the prior year is primarily due to higher pulp and
lumber sales realizations partially offset by lower pulp and energy
sales volumes and higher maintenance and per unit fiber costs in
the current quarter.
In the nine months ended September 30, 2018,
operating income increased to $176.9 million or by 74% from $101.9
million in the same period of 2017 as higher pulp and lumber sales
realizations more than offset lower pulp and energy sales volumes,
higher maintenance and per unit fiber costs and the negative impact
of a weaker dollar on our euro denominated costs and expenses.
Segment
Results
Pulp: Stable pulp realizations and significant turbine
maintenance complete
|
Three Months Ended |
|
September 30, |
|
2018 |
|
2017 |
|
|
|
(in thousands) |
Pulp revenues |
$ |
274,970 |
|
|
$ |
247,314 |
|
Energy and chemical
revenues |
$ |
17,999 |
|
|
$ |
25,044 |
|
Operating income |
$ |
68,794 |
|
|
$ |
40,982 |
|
In the third quarter of 2018 pulp segment
operating income increased by approximately 68% to $68.8 million
from $41.0 million in the same quarter of 2017. In the current
quarter our pulp realized sales price increased by approximately
34% to $852 per ADMT from $638 per ADMT in the same quarter of the
prior year as a result of steady demand. Pulp sales volumes
decreased by approximately 17% to 319,850 ADMTs in the current
quarter from 383,795 ADMTs in the same quarter of the prior year
primarily due to lower production and the timing of shipments to
China. Our maintenance program was larger in the current quarter
which reduced our energy and pulp sales volumes and increased our
costs. Included in this quarter’s maintenance was the completion of
the final steps of the turbine revision work at each of our Stendal
and Celgar mills which we began in Q2. We estimate that planned
annual maintenance downtime at our Rosenthal mill in the current
quarter adversely impacted our operating income by approximately
$10.8 million, and our turbine maintenance this quarter resulted in
foregone energy revenue of approximately $5.9 million. Per unit
fiber costs increased by approximately 15% in the current quarter
from the same quarter of 2017 primarily as a result of strong
demand for imported wood from Scandinavian pulp mills and in our
Celgar mill’s fiber basket, a decrease in pulp log availability and
demand from coastal pulp mills.
Wood Products: Continuous improvements
in equipment and operations
|
Three Months Ended |
|
September 30, |
|
2018 |
|
2017 |
|
|
|
(in thousands) |
Lumber revenues |
$ |
34,270 |
|
|
$ |
27,851 |
|
Energy revenues |
$ |
1,978 |
|
|
$ |
3,116 |
|
Wood residual
revenues |
$ |
1,841 |
|
|
$ |
2,173 |
|
Operating income
(loss) |
$ |
(1,770 |
) |
|
$ |
2,983 |
|
In the third quarter of 2018 our wood products
segment had an operating loss of $1.8 million compared to operating
income of $3.0 million in the same quarter of 2017. In the current
quarter we took planned downtime to upgrade our large saw line and
to install an auto-grader in the existing planer mill which reduced
our production and energy sales and increased our costs. In
the current quarter, per unit fiber costs increased by
approximately 4% from the same quarter of 2017 primarily as a
result of strong fiber demand. Average lumber sales
realizations increased by approximately 9% to $409 per Mfbm in the
third quarter of 2018 from approximately $375 per Mfbm in the same
quarter of 2017 primarily due to increased sales to the U.S. where
we realized higher sale prices.
Outlook
We continue to expect the NBSK pulp market to
remain balanced through the fourth quarter due to continued steady
demand growth and expected supply limitations. At the end of
September world producer inventories are about 33 days' supply. We
currently expect fourth quarter lumber pricing in Europe and Japan
to remain stable and we feel U.S. prices are near their floor.
In the fourth quarter we will also be focused on
closing the Daishowa-Marubeni International Ltd. acquisition and
beginning the process of integrating it into Mercer to ensure we
maximize our identified synergies. We look forward to working with
our new employees as well as our new government and various
community stakeholders.
Quarterly Dividend
A quarterly dividend of $0.125 per share will be
paid on December 20, 2018 to all shareholders of record on December
13, 2018. 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 October 26, 2018 at 10:00 AM
(Eastern Daylight Time). Listeners can access the conference call
live and archived for 30 days over the Internet at
https://edge.media-server.com/m6/p/firrbdse or through a link on
the company's home page at http://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 1.5 million tonnes of
NBSK pulp and 550 million board feet of lumber. To obtain further
information on the company, please visit its web site at
http://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.
APPROVED BY:
Jimmy S.H. LeeExecutive Chairman(604) 684-1099
David M. GandossiChief Executive Officer (604) 684-1099
-FINANCIAL TABLES FOLLOW-
Summary Financial
Highlights
|
Q3 |
|
Q2 |
|
Q3 |
|
YTD |
|
YTD |
|
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
(in thousands, except per share
amounts) |
|
Pulp segment
revenues |
$ |
292,969 |
|
|
$ |
291,632 |
|
|
$ |
272,358 |
|
|
$ |
898,836 |
|
|
$ |
781,028 |
|
|
Wood products segment
revenues |
38,089 |
|
|
54,900 |
|
|
33,140 |
|
|
146,657 |
|
|
50,431 |
|
|
Total revenues |
$ |
331,058 |
|
|
$ |
346,532 |
|
|
$ |
305,498 |
|
|
$ |
1,045,493 |
|
|
$ |
831,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment operating
income |
$ |
68,794 |
|
|
$ |
36,976 |
|
|
$ |
40,982 |
|
(1) |
$ |
179,824 |
|
|
$ |
104,411 |
|
(1) |
Wood products segment
operating income (loss) |
(1,770 |
) |
|
4,322 |
|
|
2,983 |
|
|
5,534 |
|
|
3,064 |
|
|
Corporate and other
operating loss |
(3,678 |
) |
|
(3,822 |
) |
|
(2,303 |
) |
|
(8,488 |
) |
|
(5,604 |
) |
|
Total operating
income |
$ |
63,346 |
|
|
$ |
37,476 |
|
|
$ |
41,662 |
|
|
$ |
176,870 |
|
|
$ |
101,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pulp segment
depreciation and amortization |
$ |
20,802 |
|
|
$ |
21,127 |
|
|
$ |
21,149 |
|
|
$ |
63,452 |
|
|
$ |
59,652 |
|
|
Wood products segment
depreciation and amortization |
2,395 |
|
|
1,779 |
|
|
1,419 |
|
|
5,860 |
|
|
2,553 |
|
|
Corporate and other
depreciation and amortization |
113 |
|
|
108 |
|
|
105 |
|
|
331 |
|
|
314 |
|
|
Total depreciation and
amortization |
$ |
23,310 |
|
|
$ |
23,014 |
|
|
$ |
22,673 |
|
|
$ |
69,643 |
|
|
$ |
62,519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating EBITDA |
$ |
86,656 |
|
|
$ |
60,490 |
|
|
$ |
64,335 |
|
(1) |
$ |
246,513 |
|
|
$ |
164,390 |
|
(1) |
Loss on settlement of
debt |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
21,515 |
|
(2) |
$ |
10,696 |
|
(3) |
Legal cost award |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
6,951 |
|
|
$ |
— |
|
|
Provision for income
taxes |
$ |
10,182 |
|
|
$ |
8,461 |
|
|
$ |
6,632 |
|
|
$ |
28,224 |
|
|
$ |
21,897 |
|
|
Net income |
$ |
41,176 |
|
|
$ |
16,755 |
|
|
$ |
21,143 |
|
|
$ |
83,580 |
|
|
$ |
28,765 |
|
|
Net income per common
share |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.63 |
|
|
$ |
0.26 |
|
|
$ |
0.33 |
|
|
$ |
1.28 |
|
|
$ |
0.44 |
|
|
Diluted |
$ |
0.63 |
|
|
$ |
0.26 |
|
|
$ |
0.32 |
|
|
$ |
1.27 |
|
|
$ |
0.44 |
|
|
Common shares
outstanding at period end |
65,202 |
|
|
65,202 |
|
|
65,017 |
|
|
65,202 |
|
|
65,017 |
|
|
(1)
Adjusted as a result of our adoption of Accounting Standards Update
2017-07, Improving the Presentation of Net Periodic Pension Cost
and Net Periodic Post-Retirement Benefit Cost, in the current year.
See Note 1 to our Interim Consolidated Financial
Statements.(2) Redemption of 7.75% senior notes due
2022.(3) Redemption of 7.00% senior notes due 2019.
Summary Operating
Highlights
|
Q3 |
|
Q2 |
|
Q3 |
|
YTD |
|
YTD |
|
Pulp Segment |
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Pulp production ('000 ADMTs) |
363.5 |
|
|
309.7 |
|
|
388.1 |
|
|
1,037.7 |
|
|
1,124.5 |
|
|
Annual maintenance downtime ('000 ADMTs) |
14.4 |
|
|
55.4 |
|
|
10.2 |
|
|
69.9 |
|
|
42.7 |
|
|
Annual maintenance downtime (days) |
14 |
|
|
37 |
|
|
10 |
|
|
51 |
|
|
32 |
|
|
Pulp sales ('000 ADMTs) |
319.9 |
|
|
338.3 |
|
|
383.8 |
|
|
1,025.2 |
|
|
1,147.7 |
|
|
Average NBSK pulp list prices in Europe
($/ADMT)(1) |
1,230 |
|
|
1,200 |
|
|
903 |
|
|
1,176 |
|
|
869 |
|
|
Average NBSK pulp list prices in China
($/ADMT)(1) |
887 |
|
|
910 |
|
|
670 |
|
|
902 |
|
|
662 |
|
|
Average NBSK pulp list prices in North America
($/ADMT)(1) |
1,377 |
|
|
1,310 |
|
|
1,110 |
|
|
1,307 |
|
|
1,079 |
|
|
Average pulp sales realizations ($/ADMT)(2) |
852 |
|
|
821 |
|
|
638 |
|
|
817 |
|
|
615 |
|
|
Energy production ('000 MWh) |
388.0 |
|
|
294.7 |
|
|
497.5 |
|
|
1,120.7 |
|
|
1,418.5 |
|
|
Energy sales ('000 MWh) |
141.0 |
|
|
84.6 |
|
|
224.8 |
|
|
401.3 |
|
|
620.9 |
|
|
Average energy sales realizations ($/MWh) |
105 |
|
|
99 |
|
|
97 |
|
|
105 |
|
|
92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood Products Segment |
|
|
|
|
|
|
|
|
|
|
Lumber production (MMfbm) |
79.5 |
|
|
112.0 |
|
|
109.6 |
|
|
294.8 |
|
|
177.1 |
|
|
Lumber sales (MMfbm) |
83.8 |
|
|
113.1 |
|
|
74.2 |
|
|
312.0 |
|
|
115.7 |
|
|
Average lumber sales realizations ($/Mfbm) |
409 |
|
|
433 |
|
|
375 |
|
|
421 |
|
|
358 |
|
|
Energy production and sales ('000 MWh) |
16.4 |
|
|
25.6 |
|
|
24.5 |
|
|
62.5 |
|
|
48.5 |
|
|
Average energy sales realizations ($/MWh) |
121 |
|
|
127 |
|
|
127 |
|
|
128 |
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Spot Currency Exchange Rates |
|
|
|
|
|
|
|
|
|
|
$ / €(3) |
1.1629 |
|
|
1.1922 |
|
|
1.1755 |
|
|
1.1945 |
|
|
1.1146 |
|
|
$ / C$(3) |
0.7651 |
|
|
0.7750 |
|
|
0.7984 |
|
|
0.7767 |
|
|
0.7659 |
|
|
(1) Source: RISI pricing
report.(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) 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 September
30 |
|
Nine Months Ended September
30 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
Revenues |
$ |
331,058 |
|
|
$ |
305,498 |
|
|
$ |
1,045,493 |
|
|
$ |
831,459 |
|
Costs and expenses |
|
|
|
|
|
|
|
Operating costs, excluding depreciation and
amortization |
230,009 |
|
|
228,941 |
|
|
755,428 |
|
|
632,071 |
|
Operating depreciation and amortization |
23,197 |
|
|
22,568 |
|
|
69,312 |
|
|
62,205 |
|
Selling, general and administrative expenses |
14,506 |
|
|
12,327 |
|
|
43,883 |
|
|
35,312 |
|
Operating income |
63,346 |
|
|
41,662 |
|
|
176,870 |
|
|
101,871 |
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
Interest expense |
(11,729 |
) |
|
(13,513 |
) |
|
(35,972 |
) |
|
(40,712 |
) |
Loss on settlement of debt |
— |
|
|
— |
|
|
(21,515 |
) |
|
(10,696 |
) |
Legal cost award |
— |
|
|
— |
|
|
(6,951 |
) |
|
— |
|
Other income (expenses) |
(259 |
) |
|
(374 |
) |
|
(628 |
) |
|
199 |
|
Total other expenses |
(11,988 |
) |
|
(13,887 |
) |
|
(65,066 |
) |
|
(51,209 |
) |
Income before provision for income taxes |
51,358 |
|
|
27,775 |
|
|
111,804 |
|
|
50,662 |
|
Provision for income taxes |
(10,182 |
) |
|
(6,632 |
) |
|
(28,224 |
) |
|
(21,897 |
) |
Net income |
$ |
41,176 |
|
|
$ |
21,143 |
|
|
$ |
83,580 |
|
|
$ |
28,765 |
|
|
|
|
|
|
|
|
|
Net income per common share |
Basic |
$ |
0.63 |
|
|
$ |
0.33 |
|
|
$ |
1.28 |
|
|
$ |
0.44 |
|
Diluted |
$ |
0.63 |
|
|
$ |
0.32 |
|
|
$ |
1.27 |
|
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
$ |
0.125 |
|
|
$ |
0.115 |
|
|
$ |
0.375 |
|
|
$ |
0.345 |
|
MERCER INTERNATIONAL
INC.INTERIM CONSOLIDATED BALANCE
SHEETS(Unaudited)(In thousands,
except share and per share data)
|
September 30, |
|
December 31, |
|
2018 |
|
2017 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
242,185 |
|
|
$ |
143,299 |
|
Restricted cash to redeem senior notes |
— |
|
|
317,439 |
|
Accounts receivable |
193,648 |
|
|
206,027 |
|
Inventories |
229,784 |
|
|
176,601 |
|
Prepaid expenses and other |
12,417 |
|
|
8,973 |
|
Total current assets |
678,034 |
|
|
852,339 |
|
|
|
|
|
Property, plant and equipment, net |
834,347 |
|
|
844,848 |
|
Intangible and other assets |
24,274 |
|
|
26,147 |
|
Deferred income tax |
4,641 |
|
|
1,376 |
|
Total assets |
$ |
1,541,296 |
|
|
$ |
1,724,710 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Current liabilities |
|
|
|
Accounts payable and other |
$ |
173,784 |
|
|
$ |
133,557 |
|
Pension and other post-retirement benefit
obligations |
955 |
|
|
985 |
|
Senior notes to be redeemed with restricted
cash |
— |
|
|
295,924 |
|
Total current liabilities |
174,739 |
|
|
430,466 |
|
|
|
|
|
Debt |
696,519 |
|
|
662,997 |
|
Pension and other post-retirement benefit
obligations |
22,705 |
|
|
21,156 |
|
Capital leases and other |
36,239 |
|
|
27,464 |
|
Deferred income tax |
41,152 |
|
|
31,961 |
|
Total liabilities |
971,354 |
|
|
1,174,044 |
|
|
|
|
|
Shareholders’ equity |
|
|
|
Common shares $1 par value; 200,000,000 authorized;
65,202,000 issued and outstanding (2017 – 65,017,000) |
65,171 |
|
|
64,974 |
|
Additional paid-in capital |
341,420 |
|
|
338,695 |
|
Retained earnings |
265,131 |
|
|
205,998 |
|
Accumulated other comprehensive loss |
(101,780 |
) |
|
(59,001 |
) |
Total shareholders’ equity |
569,942 |
|
|
550,666 |
|
Total liabilities and shareholders’ equity |
$ |
1,541,296 |
|
|
$ |
1,724,710 |
|
|
|
|
|
MERCER INTERNATIONAL
INC.INTERIM CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)(In
thousands)
|
Three Months
Ended September 30, |
|
Nine Months
EndedSeptember 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Cash flows from (used in) operating activities |
|
|
|
|
|
|
|
Net income |
$ |
41,176 |
|
|
$ |
21,143 |
|
|
$ |
83,580 |
|
|
$ |
28,765 |
|
Adjustments to reconcile net income to
cash flows from operating activities |
|
|
|
|
Depreciation and amortization |
23,310 |
|
|
22,673 |
|
|
69,643 |
|
|
62,519 |
|
Deferred income tax provision |
1,314 |
|
|
4,184 |
|
|
7,330 |
|
|
12,589 |
|
Loss on settlement of debt |
— |
|
|
— |
|
|
21,515 |
|
|
10,696 |
|
Defined benefit pension plan and other
post-retirement benefit plan expense |
423 |
|
|
549 |
|
|
1,294 |
|
|
1,615 |
|
Stock compensation expense |
970 |
|
|
774 |
|
|
2,922 |
|
|
1,525 |
|
Other |
884 |
|
|
783 |
|
|
3,015 |
|
|
1,308 |
|
Defined benefit pension plan and other
post-retirement benefit plan contributions |
(19 |
) |
|
(458 |
) |
|
(124 |
) |
|
(1,309 |
) |
Changes in working capital |
|
|
|
|
|
|
|
Accounts receivable |
(150 |
) |
|
1,584 |
|
|
8,193 |
|
|
(42,130 |
) |
Inventories |
(41,084 |
) |
|
(14,043 |
) |
|
(60,127 |
) |
|
(9,912 |
) |
Accounts payable and accrued expenses |
(10,803 |
) |
|
(1,906 |
) |
|
44,130 |
|
|
41,929 |
|
Other |
(5,252 |
) |
|
(1,496 |
) |
|
(8,480 |
) |
|
(4,338 |
) |
Net cash from (used in) operating activities |
10,769 |
|
|
33,787 |
|
|
172,891 |
|
|
103,257 |
|
|
|
|
|
|
|
|
|
Cash flows from (used in) investing activities |
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
(26,744 |
) |
|
(14,342 |
) |
|
(71,583 |
) |
|
(42,249 |
) |
Purchase of intangible assets |
(163 |
) |
|
(394 |
) |
|
(483 |
) |
|
(799 |
) |
Acquisition of Friesau Facility |
— |
|
|
— |
|
|
— |
|
|
(61,627 |
) |
Other |
211 |
|
|
(381 |
) |
|
278 |
|
|
(304 |
) |
Net cash from (used in) investing activities |
(26,696 |
) |
|
(15,117 |
) |
|
(71,788 |
) |
|
(104,979 |
) |
|
|
|
|
|
|
|
|
Cash flows from (used in) financing activities |
|
|
|
|
|
|
|
Redemption of senior notes |
— |
|
|
— |
|
|
(317,439 |
) |
|
(234,945 |
) |
Proceeds from issuance of senior notes |
— |
|
|
— |
|
|
— |
|
|
250,000 |
|
Proceeds from (repayment of) revolving credit
facilities, net |
(3,443 |
) |
|
— |
|
|
34,293 |
|
|
26,525 |
|
Dividend payments |
(8,150 |
) |
|
(7,477 |
) |
|
(24,424 |
) |
|
(22,389 |
) |
Payment of interest rate derivative liability |
— |
|
|
— |
|
|
— |
|
|
(3,789 |
) |
Payment of debt issuance costs |
— |
|
|
— |
|
|
(1,390 |
) |
|
(6,132 |
) |
Other |
(944 |
) |
|
(389 |
) |
|
(2,563 |
) |
|
569 |
|
Net cash from (used in) financing activities |
(12,537 |
) |
|
(7,866 |
) |
|
(311,523 |
) |
|
9,839 |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
1,167 |
|
|
3,895 |
|
|
(8,133 |
) |
|
10,329 |
|
Net increase (decrease) in cash, cash equivalents and restricted
cash |
(27,297 |
) |
|
14,699 |
|
|
(218,553 |
) |
|
18,446 |
|
Cash, cash equivalents and restricted cash, beginning of
period |
269,482 |
|
|
144,643 |
|
|
460,738 |
|
|
140,896 |
|
Cash, cash equivalents and restricted cash, end of period |
$ |
242,185 |
|
|
$ |
159,342 |
|
|
$ |
242,185 |
|
|
$ |
159,342 |
|
|
|
|
|
|
|
|
|
Supplemental cash flow disclosure |
|
|
|
|
|
|
|
Cash paid for interest |
$ |
19,591 |
|
|
$ |
8,430 |
|
|
$ |
35,287 |
|
|
$ |
29,311 |
|
Cash paid for income taxes |
$ |
2,192 |
|
|
$ |
2,797 |
|
|
$ |
6,412 |
|
|
$ |
8,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MERCER INTERNATIONAL INC.
COMPUTATION OF OPERATING
EBITDA(Unaudited)(In
thousands)
Operating EBITDA is defined as operating income
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 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, 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 or income from
operations as a measure of performance, nor as an alternative to
net cash from operating activities as a measure of
liquidity. The following tables set forth the net income to
Operating EBITDA:
|
Q3 |
|
Q2 |
|
Q3 |
|
YTD |
|
YTD |
|
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Net income |
$ |
41,176 |
|
|
$ |
16,755 |
|
|
$ |
21,143 |
|
|
$ |
83,580 |
|
|
$ |
28,765 |
|
|
Provision for income taxes |
10,182 |
|
|
8,461 |
|
|
6,632 |
|
|
28,224 |
|
|
21,897 |
|
|
Interest expense |
11,729 |
|
|
12,128 |
|
|
13,513 |
|
|
35,972 |
|
|
40,712 |
|
|
Loss on settlement of debt |
— |
|
|
— |
|
|
— |
|
|
21,515 |
|
|
10,696 |
|
|
Legal cost award |
— |
|
|
— |
|
|
— |
|
|
6,951 |
|
|
— |
|
|
Other (income) expenses |
259 |
|
|
132 |
|
|
374 |
|
|
628 |
|
|
(199 |
) |
|
Operating income |
63,346 |
|
|
37,476 |
|
|
41,662 |
|
|
176,870 |
|
|
101,871 |
|
|
Add: Depreciation and amortization |
23,310 |
|
|
23,014 |
|
|
22,673 |
|
|
69,643 |
|
|
62,519 |
|
|
Operating EBITDA |
$ |
86,656 |
|
|
$ |
60,490 |
|
|
$ |
64,335 |
|
|
$ |
246,513 |
|
|
$ |
164,390 |
|
|
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