Today, Mercer International Inc. has released its 10-K report. The company, headquartered in Vancouver, Canada, operates in two segments: Pulp and Solid Wood. Mercer International manufactures and sells northern bleached softwood kraft (NBSK) pulp, lumber, cross-laminated timber, biofuels, and wood residuals. The company also generates and sells green energy produced from biomass cogeneration power plants. Mercer International's shares have moved -6.2% on the market, now trading at $7.32.
In the annual report, Mercer International reported a 13% decrease in total revenues to $1,993.8 million in 2023 from $2,280.9 million in 2022. This was primarily due to lower pulp, lumber, and energy sales realizations, partially offset by higher sales volumes. Costs and expenses increased by approximately 16% to $2,182.6 million in 2023 from $1,888.6 million in 2022, mainly due to the inclusion of Torgau for a full year, higher per unit fiber costs, and a non-cash impairment related to the sandalwood business.
The company's pulp segment revenues were $1,516.1 million in 2023, down from $1,866.1 million in 2022. The pulp segment's operating loss was $48.3 million in 2023, compared to an operating income of $340.7 million in 2022. The solid wood segment's revenues increased to $472.1 million in 2023 from $408.5 million in 2022, but the segment reported an operating loss of $87.7 million in 2023, compared to an operating income of $70.6 million in 2022.
Mercer International's operating EBITDA was $17.5 million in 2023, significantly down from $536.5 million in 2022. The company reported a net loss of $242.1 million in 2023, compared to a net income of $247.0 million in 2022. The company's production of NBSK pulp increased to 1,714.4 thousand ADMTs in 2023 from 1,607.6 thousand ADMTs in 2022, while NBSK pulp sales also saw a slight increase.
Looking ahead, Mercer International expects modestly increasing NBSK pulp prices in Europe in the first half of 2024, stable prices for NBSK pulp in China and North America, and a modest increase in U.S. lumber prices driven by increased housing activity. The company also anticipates stable mass timber prices due to continued strong demand for green alternative building products.
For more information, read the company's full 10-K submission here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $1,458 | $1,624 | $1,423 | $1,803 | $2,281 | $2,106 |
| Operating Margins | 18% | 5% | 4% | 19% | 17% | -4% |
| Net Margins | 9% | -1% | -1% | 9% | 11% | -6% |
| Net Income (M) | $129 | -$10 | -$17 | $171 | $247 | -$135 |
| Net Interest Expense (M) | $51 | $76 | $81 | $70 | $71 | $80 |
| Depreciation & Amort. (M) | $97 | $126 | $129 | $132 | $144 | $178 |
| Diluted Shares (M) | 66 | 66 | 66 | 66 | 67 | 66 |
| Earnings Per Share | $1.96 | -$0.15 | -$0.26 | $2.58 | $3.71 | -$2.03 |
| EPS Growth | n/a | -107.65% | -73.33% | 1092.31% | 43.8% | -154.72% |
| Avg. Price | $12.65 | $11.73 | $7.79 | $12.01 | $13.32 | $7.8 |
| Free Cash Flow (M) | $150 | $112 | -$37 | $23 | $182 | -$170 |
| CAPEX (M) | $87 | $132 | $79 | $159 | $179 | $160 |
| EV / EBITDA | 4.45 | 7.14 | 6.68 | 3.52 | 3.49 | 19.06 |
| Total Debt (M) | $1,041 | $1,088 | $1,136 | $1,238 | $1,347 | $1,590 |
| Net Debt / EBITDA | 2.2 | 3.5 | 4.02 | 1.86 | 1.85 | 13.48 |
| Current Ratio | 4.15 | 3.3 | 4.13 | 3.76 | 3.12 | 3.97 |
