Mercer International Inc. (NASDAQ:MERC) Q4 2022 Earnings Conference Call February 17, 2023 10:00 AM ET

Company Representatives

Juan Carlos Bueno - President, Chief Executive Officer

David Ure - Senior Vice President, Finance, Chief Financial Officer and Secretary

Conference Call Participants

Kasia Kopytek - TD Securities

Paul Quinn - RBC Capital Markets

Andrew Kuske - Credit Suisse

Operator

Good morning and welcome to Mercer International’s, Fourth Quarter 2022 Earnings Conference Call. On the call today is Juan Carlos Bueno, President and Chief Executive Officer of Mercer International with David Ure, Senior Vice President, Finance, Chief Financial Officer and Secretary.

I will now hand the call over to David Ure. Thank you.

David Ure

Good morning, everyone. Thanks for joining us today. I will begin by touching on the financial and operating highlights of the fourth quarter, before returning the call to Juan Carlos to provide further color on the markets, our capital plan as well as our strategic initiatives. Also, for those of you that have joined today’s call by telephone, there is a presentation material that we’ve attached to the Investor section of our website.

But before turning to our results, I’d like to remind you that in this morning’s conference call, we will make forward-looking statements. And according to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, I’d like to call your attention to the risks related to these statements, which are more fully described in our press release and in the company’s filings with the Securities and Exchange Commission.

This quarter we achieved EBITDA of approximately $96 million compared to Q3 EBITDA of roughly $141 million. This solid Q4 results was a consequence of improved pulp production of our Stendal mill, as we return the mill to near full production after the Q3 wood yard fire, along with higher pulp and energy sales volumes. This was more than offset by lower energy sales realizations in Europe due to the recently implemented energy price cap, along with considerably higher pulp fiber and chemical costs.

In the 2022 fiscal year, we achieved record EBITDA of almost $537 million, driven by strong pricing for our products through most of 2022, a relatively strong U.S. dollar compared to the Euro and Canadian dollar, along with improved pulp sales volumes.

Currently, Stendal is approaching 100% of capacity, and we expect the final repairs to the fire damaged wood yard infrastructure to be complete in Q2. The loss is covered by our insurance program, and we expect it to be settled later in 2023 once permanent repairs are complete. As of today, we have received advance payments from our insurer totaling roughly $18 million.