Mercer International Inc. (NASDAQ:MERC) Q3 2022 Earnings Conference Call October 28, 2022 10:00 AM ET

Company Participants

Juan Carlos Beuno - President and Chief Executive Officer

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

Conference Call Participants

Sean Stewart - TD securities

Hamir Patel - CIBC Capital Markets

Andrew Kuske - Credit Suisse

Matthew McKellar - RBS Capital Markets

Dennis Collins - Stifel

Operator

Hello and welcome to Mercer International’s Third Quarter 2022 Earnings Conference Call. My name is Sarah and I will be your coordinator for today’s event. Please note this conference is being recorded and for the duration of the call, your lines will be on listen-only. [Operator Instructions]

On the call today is Juan Carlos Beuno, Mercer’s President and CEO; and David Ure, Mercer’s 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 second quarter before returning the call to Juan Carlos to provide further color on the markets, a strategy update and of course, our recently announced acquisition.

Also, for those of you that have joined today’s call by telephone, there is a presentation material that we have attached to the Investors section of our website. But before turning to our results, I would 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 $141 million compared to Q2 EBITDA of roughly $145 million, which takes our year-to-date EBITDA to a record level of $440 million. This solid result was principally a consequence of improved pricing for energy and pulp, a reduced level of major maintenance, along with the positive impact of a stronger U.S. dollar being offset by lower lumber pricing and cost associated with the chip pile fire at our Stendal mill and lower pulp sales volume. 50,000 tons of which was a consequence of the Stendal fire.

We are currently planning for the necessary permanent repairs to Stendal’s fire damaged chip pile infrastructure. The loss is covered by our insurance program and we expect that it will be settled in the first half of 2023 once permanent repairs are complete. To-date, we have received advance payments from our insurer totaling roughly $9 million. The energy situation in Europe remains extremely dynamic. The threat of natural gas restrictions is pushing costs for all forms of energy and energy derivatives higher.