Mercer International Inc. (NASDAQ:MERC) Q1 2024 Earnings Conference Call May 10, 2024 10:00 AM ET

Company Participants

Richard Short - Chief Financial Officer & Secretary
Juan Carlos Bueno - President & Chief Executive Officer

Conference Call Participants

Hamir Patel - CIBC
Sean Steuart - TD Cowen
Harman Dhatt - RBC Capital Markets

Operator

Good morning, and welcome to Mercer International's First Quarter 2024 Earnings Conference Call.

On the call today is Juan Carlos Bueno, Mercer's President and Chief Executive Officer, and Richard Short, Mercer's Chief Financial Officer and Secretary.

I will now hand the call over to Richard.

Richard Short

Thanks, Liz. Good morning, everyone. Thanks for joining us today.

I will begin by touching on the financial and operating highlights of the first quarter before turning the call to Juan Carlos to provide further color into the markets, our operations, and our strategic initiatives. Also, for those of you that are joining today's call by telephone, there is 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 we will make forward-looking statements in this morning's conference call 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, our EBITDA was $64 million compared to Q4 EBITDA of $21 million. The improved results were driven by not having any major maintenance downtime, improving pulp sales realizations, and lower fiber and other production costs. Our pulp segment contributed quarterly EBITDA of $68 million, and our solid wood segment EBITDA was negative $1 million. You can find additional segment disclosures in our Form 10-Q, which can be found on our website and that of the SEC.

In Q1, both our NBSK and NBHK sales realizations increased compared to Q4. Average list prices increased in Europe and North America due to stronger demand and global supply constraints. In China, prices were flat as demand slowed during the Chinese New Year and picked up near the end of the quarter. The European NBSK list price averaged $1,400 per ton in the current quarter, an increase of $155 or 12% from Q4. And the North American NBSK list price averaged $1,440 per ton in the current quarter, an increase of $128 or 10% from Q4. In China, the Q1 average NBHK net price was $662 per ton, up $19 or about 3% compared to the Q4 average price, resulting in the market price gap between NBSK and NBHK in China, narrowing to about $83 per ton in Q1 from $105 per ton in Q4. The North American NBHK average Q1 list price was $1,223 per ton, up $140 or 13% from Q4.