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Mercer International Inc. Reports Third Quarter and First Nine Months of 2023 Results and Announces Quarterly Cash Dividend of $0.075
Источник: Nasdaq GlobeNewswire / 02 ноя 2023 16:30:12 America/New_York
Selected Highlights
- Third quarter Operating EBITDA* of $37.5 million and net loss of $26.0 million
- Continued strong growth and integration of our mass timber business
- Enhanced liquidity by completing $200 million 2028 senior note issue and expanding availability under German revolving credit facility by €70 million
- Quarterly cash dividend of $0.075 per share
NEW YORK, Nov. 02, 2023 (GLOBE NEWSWIRE) -- Mercer International Inc. (Nasdaq: MERC) today reported that Operating EBITDA in the third quarter was $37.5 million compared to $140.9 million in the same quarter of 2022 and improved from negative $68.7 million in the prior quarter of 2023.
In the third quarter of 2023, net loss was $26.0 million (or $0.39 per share) compared to net income of $66.7 million (or $1.01 per basic share and $1.00 per diluted share) in the third quarter of 2022 and a net loss of $98.3 million (or $1.48 per share) in the second quarter of 2023.
In the nine months ended September 30, 2023, Operating EBITDA was negative $3.7 million compared to positive $440.4 million in the same period of 2022. In the nine months ended September 30, 2023, net loss was $154.8 million (or $2.33 per share) compared to net income of $227.0 million (or $3.43 per basic share and $3.41 per diluted share) in the same period of 2022.
Mr. Juan Carlos Bueno, the Chief Executive Officer, stated: “Our third quarter results were significantly better than the second quarter due to lower fiber and other production costs as inflationary pressures eased. Fiber costs for all our mills decreased in the third quarter from the prior quarter driven by the availability of calamity wood in Germany, our renegotiation of fiber costs for Celgar and the ramp up of our wood room at the Peace River mill.
During the third quarter of this year, we continued to be negatively impacted by the overall weakness in the pulp and lumber markets. Pulp prices in China showed modest signs of recovery as customers started restocking. At the end of September, softwood pulp prices in China were $67 per tonne higher and hardwood pulp prices were $55 per tonne higher compared to the end of the second quarter. Late in the third quarter we also started to see modest price improvements in Europe and stabilization in North America.
In the third quarter we had 39 days of downtime (approximately 48,400 ADMTs) at our pulp mills which included 13 days for planned maintenance and 26 days for market curtailment at our Celgar mill. All other mills ran very efficiently during the quarter. In the fourth quarter of 2023, we are planning for a total of 29 days of maintenance downtime (41,200 ADMTs) at our pulp mills.
Since 2021, we have invested approximately $396.6 million to expand our solid wood activities and product mix to acquire the Mercer Spokane Mass Timber facility, Torgau facility and the recent acquisitions of mass timber facilities in Arkansas and Canada. During the quarter both sales volumes and revenues for our mass timber business increased as we continued the integration activities of these operations. The new operations increased both our production capacity and our product range to include glulam products sought by our customers. We saw strong growth in our mass timber business by securing major customer contracts and building up our order book. The scale of these contracts has significantly ramped up operations. The mass timber business is a key component of our strategy and we expect strong growth for the coming years as we continue to ramp up our operations.
In September, we reinforced our liquidity position by completing a private offering of the $200 million 2028 senior notes and increasing the availability of our German revolving credit facility by €70 million to €370 million."
Mr. Bueno concluded: “Although year to date, the pulp and lumber markets have been soft, we are now seeing some improvements, including modestly higher pulp pricing across all our markets and lower costs, particular for fiber. Our team has demonstrated resilience by focusing on the variables we can control such as reducing our inventories and capital spending, and cutting discretionary spending to ensure our cash and liquidity levels continue to be healthy. As a result of our strong liquidity, we are well positioned to continue to execute our strategic plan through this business cycle, while maintaining a strong focus on lowering costs and liquidity.”
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*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 (loss) to Operating EBITDA.Consolidated Financial Results
Q3 Q2 Q3 YTD YTD 2023 2023 2022 2023 2022 (in thousands, except per share amounts) Revenues $ 470,821 $ 529,863 $ 532,814 $ 1,523,350 $ 1,697,881 Operating income (loss) $ (3,426 ) $ (108,832 ) $ 108,723 $ (132,379 ) $ 345,105 Operating EBITDA $ 37,527 $ (68,680 ) $ 140,867 $ (3,683 ) $ 440,393 Net income (loss) $ (25,956 ) $ (98,306 ) $ 66,746 $ (154,840 ) $ 227,015 Net income (loss) per common share Basic $ (0.39 ) $ (1.48 ) $ 1.01 $ (2.33 ) $ 3.43 Diluted $ (0.39 ) $ (1.48 ) $ 1.00 $ (2.33 ) $ 3.41 Consolidated – Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022
Total revenues in the third quarter of 2023 decreased by approximately 12% to $470.8 million from $532.8 million in the same quarter of 2022 primarily due to lower pulp, energy and lumber sales realizations partially offset by higher sales volumes, the inclusion of Torgau, and higher manufactured product sales realizations.
Costs and expenses in the third quarter of 2023 increased by approximately 12% to $474.2 million from $424.1 million in the third quarter of 2022 primarily due to the inclusion of Torgau and higher sales volumes partially offset by lower per unit fiber, freight and other production costs. In the third quarter of 2023, we received an aggregate of $8.2 million of insurance proceeds relating to the fire last year at our Stendal mill compared to $3.1 million of insurance proceeds in the comparative quarter.
In the third quarter of 2023, Operating EBITDA was $37.5 million compared to $140.9 million in the same quarter of 2022 primarily due to lower pulp, energy and lumber sales realizations partially offset by lower per unit fiber, freight and other production costs and higher sales volumes.
Segment Results
PulpThree Months Ended September 30, 2023 2022 (in thousands) Pulp revenues $ 318,102 $ 395,459 Energy and chemical revenues $ 30,751 $ 61,198 Operating income $ 21,181 $ 109,985 In the third quarter of 2023, pulp segment operating income was $21.2 million compared to $110.0 million in the same quarter of 2022 primarily as a result of lower pulp and energy sales realizations and the negative impact of a weaker dollar partially offset by lower per unit fiber, freight and other production costs, higher sales volumes, and the receipt of insurance proceeds of $8.2 million.
Our pulp segment revenues decreased by approximately 24% to $348.9 million from $456.7 million in the same quarter of 2022 primarily because of the overall weak pulp market and lower energy revenues.
Pulp revenues in the third quarter of 2023 decreased by approximately 20% to $318.1 million from $395.5 million in the same quarter of 2022 due to lower sales realizations only partially offset by higher sales volumes.
Total pulp sales volumes increased by approximately 14% to 487,199 ADMTs in the third quarter of 2023 from 425,854 ADMTs in the same quarter of 2022 primarily because of higher production and the timing of sales.
In the third quarter of 2023, third party industry quoted average list prices for NBSK pulp were materially lower in all our markets compared to the same quarter of 2022. Our average NBSK pulp sales realizations decreased by approximately 27% to $666 per ADMT in the third quarter of 2023 from approximately $911 per ADMT in the same quarter of 2022. In the third quarter of 2023, our average NBHK pulp sales realizations decreased by approximately 46% compared to the same quarter of 2022.
Energy and chemical revenues decreased by approximately 50% to $30.8 million in the third quarter of 2023 from $61.2 million in the same quarter of 2022 as a result of lower energy sales realizations partially offset by higher sales volumes.
Costs and expenses in the third quarter of 2023 decreased by approximately 5% to $327.9 million from $346.7 million in the same quarter of 2022 primarily due to lower per unit fiber, freight and other production costs and the receipt of insurance proceeds in 2023, partially offset by a higher sales volume.
In the third quarter of 2023 per unit fiber costs decreased by approximately 12% from the same quarter of 2022 due to the sale and revaluation in the current quarter of inventory for which we took an impairment charge in the prior quarter. After giving effect to such impairment, per unit fiber costs increased as a result of strong demand in the mills' fiber baskets and lower wood chip availability for our Celgar mill because of regional sawmill curtailments. We currently expect per unit fiber costs to decrease in the fourth quarter of 2023 driven by improved supply.
Solid Wood
Three Months Ended September 30, 2023 2022 (in thousands) Lumber revenues $ 50,815 $ 54,327 Energy revenues $ 5,468 $ 8,111 Manufactured products revenues(1) $ 20,850 $ 7,117 Pallet revenues $ 28,807 $ — Biofuels revenues(2) $ 11,387 $ — Wood residuals revenues $ 2,220 $ 4,711 Operating income (loss) $ (19,690 ) $ 2,896 ______________
(1) Manufactured products primarily includes cross-laminated timber, glulam and finger joint lumber.
(2) Biofuels includes pellets and briquettes.In the third quarter of 2023, operating loss was $19.7 million compared to operating income of $2.9 million in the same quarter of 2022 primarily due to lower lumber and energy sales realizations partially offset by higher manufactured products sales realizations.
In the third quarter of 2023, solid wood segment revenues increased by approximately 61% to $119.5 million from $74.3 million in the same quarter of 2022 primarily as a result of the inclusion of Torgau and the ramping up of our mass timber operations partially offset by lower lumber and energy revenues.
In the third quarter of 2023, lumber revenues decreased by approximately 6% to $50.8 million from $54.3 million in the same quarter of 2022 due to lower sales realizations partially offset by higher sales volumes. In the third quarter of 2023, both U.S. and European realized lumber prices were lower because of decreased demand as a result of higher interest rates and an uncertain economic outlook compared to the same quarter of 2022. The U.S. market accounted for approximately 57% of our lumber revenues and approximately 49% of our lumber sales volumes in the third quarter of 2023. The majority of the balance of our lumber sales were to Europe.
In the third quarter of 2023, our mass timber operations continued the ramp up of their operations and manufactured products revenues increased to $20.9 million from $7.1 million in the comparative quarter of 2022 as a result of both higher sales volumes and realizations.
Energy and wood residuals revenues in the third quarter of 2023 decreased by approximately 40% to $7.7 million from $12.8 million in the same quarter of 2022 primarily caused by lower sales realizations.
Pallet revenues of $28.8 million and biofuels revenues of $11.4 million in the third quarter of 2023 are from the inclusion of Torgau.
In the third quarter of 2023, lumber production modestly decreased to 94.4 MMfbm from 97.1 MMfbm in the same quarter of 2022 as a result of maintenance downtime and the overall weak lumber market partially offset by the inclusion of Torgau.
Lumber sales volumes increased by approximately 28% to 114.7 MMfbm in the third quarter of 2023 from 89.8 MMfbm in the same quarter of 2022 primarily due to the timing of sales.
Average lumber sales realizations decreased by approximately 27% to $443 per Mfbm in the third quarter of 2023 from approximately $605 per Mfbm in the same quarter of 2022 as a result of lower demand in both the U.S. and European markets.
Manufactured products sales realizations increased to $1,752 per m3 in the third quarter of 2023 from $677 per m3 in the same quarter of 2022 as a result of higher CLT sales volumes.
Fiber costs were approximately 70% of our lumber cash production costs in the third quarter of 2023. In the third quarter of 2023, per unit fiber costs for lumber production modestly decreased compared to the same quarter of 2022 due to an increased supply of beetle damaged wood. We currently expect modestly lower per unit fiber costs in the fourth quarter of 2023 as a result of continuing availability of beetle damaged wood.
Consolidated - Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022
Total revenues for the nine months ended September 30, 2023 decreased by approximately 10% to $1,523.4 million from $1,697.9 million in the same period of 2022 primarily due to lower pulp, lumber and energy sales realizations partially offset by the inclusion of Torgau and higher sales volumes.
Costs and expenses in the nine months ended September 30, 2023 increased by approximately 22% to $1,655.7 million from $1,352.8 million in the same period of 2022 primarily caused by the inclusion of Torgau, higher per unit fiber costs, which includes the net inventory impairment charges at our Canadian pulp mills of $56.6 million, higher sales volumes and higher chemical costs. These increases were partially offset by the receipt of $37.7 million of insurance proceeds.
In the nine months ended September 30, 2023, Operating EBITDA was negative $3.7 million compared to a positive $440.4 million in the same period of 2022 primarily due to lower pulp, lumber and energy sales realizations, higher per unit fiber costs, which includes the net inventory impairment charges at our Canadian pulp mills, and higher chemical costs partially offset by insurance proceeds received and higher sales volumes .
Liquidity
During the quarter we increased the availability of our German revolving credit facility by €70.1 million to €370.1 million and completed a private offering of the $200.0 million 2028 senior notes. We utilized approximately $70.0 million of such proceeds to pay down our revolving credit facilities in September and October, 2023.The following table is a summary of selected financial information as of the dates indicated:
September 30, December 31, 2023 2022 (in thousands) Cash and cash equivalents $ 343,725 $ 354,032 Working capital $ 796,634 $ 800,114 Total assets $ 2,655,001 $ 2,725,037 Long-term liabilities $ 1,721,683 $ 1,508,192 Total shareholders' equity $ 665,452 $ 838,784 As of September 30, 2023, we had cash and cash equivalents of $343.7 million and approximately $304.7 million available under our revolving credit facilities and as a result aggregate liquidity of about $648.4 million.
Quarterly Dividend
A quarterly dividend of $0.075 per share will be paid on December 28, 2023 to all shareholders of record on December 20, 2023. 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 November 3, 2023 at 10:00 AM ET. Listeners can access the conference call live and archived for 30 days over the Internet at https://edge.media-server.com/mmc/p/qc4iogaa/ or through a link on the company's home page at https://www.mercerint.com. Please allow 15 minutes prior to the call to visit the web site and download and install any necessary audio software.Mercer International Inc. is a global forest products company with operations in Germany, USA and Canada with consolidated annual production capacity of 2.3 million tonnes of pulp, 960 million board feet of lumber, 210 thousand cubic meters of cross-laminated timber, 45 thousand cubic meters of glulam, 17 million pallets and 230,000 metric tonnes of biofuels. To obtain further information on the company, please visit its web site at https://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", "are optimistic that", "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.
-FINANCIAL TABLES FOLLOW-
Summary Financial Highlights
Q3 Q2 Q3 YTD YTD 2023 2023 2022 2023 2022 (in thousands, except per share amounts) Pulp segment revenues $ 348,853 $ 402,694 $ 456,657 $ 1,151,948 $ 1,402,892 Solid wood segment revenues 119,547 126,050 74,266 366,611 290,048 Corporate and other revenues 2,421 1,119 1,891 4,791 4,941 Total revenues $ 470,821 $ 529,863 $ 532,814 $ 1,523,350 $ 1,697,881 Pulp segment operating income (loss) $ 21,181 $ (83,459 ) $ 109,985 $ (49,507 ) $ 271,692 Solid wood segment operating income (loss) (19,690 ) (22,493 ) 2,896 (69,252 ) 84,923 Corporate and other operating loss (4,917 ) (2,880 ) (4,158 ) (13,620 ) (11,510 ) Total operating income (loss) $ (3,426 ) $ (108,832 ) $ 108,723 $ (132,379 ) $ 345,105 Pulp segment depreciation and amortization $ 28,186 $ 27,783 $ 28,174 $ 83,368 $ 82,859 Solid wood segment depreciation and amortization 12,517 12,126 3,733 44,541 11,719 Corporate and other depreciation and amortization 250 243 237 787 710 Total depreciation and amortization $ 40,953 $ 40,152 $ 32,144 $ 128,696 $ 95,288 Operating EBITDA $ 37,527 $ (68,680 ) $ 140,867 $ (3,683 ) $ 440,393 Income tax recovery (provision) $ (3,984 ) $ 27,479 $ (31,294 ) $ 28,851 $ (89,656 ) Net income (loss) $ (25,956 ) $ (98,306 ) $ 66,746 $ (154,840 ) $ 227,015 Net income (loss) per common share Basic $ (0.39 ) $ (1.48 ) $ 1.01 $ (2.33 ) $ 3.43 Diluted $ (0.39 ) $ (1.48 ) $ 1.00 $ (2.33 ) $ 3.41 Common shares outstanding at period end 66,525 66,525 66,167 66,525 66,167 Summary Operating Highlights
Q3 Q2 Q3 YTD YTD 2023 2023 2022 2023 2022 Pulp Segment Pulp production ('000 ADMTs) NBSK 397.5 450.7 362.9 1,278.2 1,216.7 NBHK 82.5 24.9 82.1 179.7 190.4 Annual maintenance downtime ('000 ADMTs) 13.3 24.5 17.3 51.2 71.5 Annual maintenance downtime (days) 13 25 17 48 60 Pulp sales ('000 ADMTs) NBSK 425.1 473.6 356.6 1,277.2 1,267.4 NBHK 62.1 63.3 69.3 182.8 185.0 Average NBSK pulp prices ($/ADMT)(1) Europe 1,160 1,247 1,500 1,261 1,422 China 680 668 969 746 959 North America 1,293 1,510 1,800 1,493 1,690 Average NBHK pulp prices ($/ADMT)(1) China 530 483 855 574 779 North America 1,023 1,277 1,620 1,274 1,483 Average pulp sales realizations ($/ADMT)(2) NBSK 666 706 911 735 865 NBHK 530 602 990 642 858 Energy production ('000 MWh)(3) 524.4 538.3 484.2 1,597.4 1,512.4 Energy sales ('000 MWh)(3) 214.8 207.7 174.3 619.4 568.3 Average energy sales realizations ($/MWh)(3) 108 101 339 112 233 Solid Wood Segment Lumber Production (MMfbm) 94.4 122.3 97.1 350.7 324.8 Sales (MMfbm) 114.7 133.9 89.8 388.4 310.7 Average sales realizations ($/Mfbm) 443 443 605 438 782 Energy Production and sales ('000 MWh) 39.0 41.9 20.6 121.4 70.6 Average sales realizations ($/MWh) 140 128 394 136 260 Manufactured products(4) Production ('000 cubic meters) 10.9 3.2 15.0 14.9 28.0 Sales ('000 cubic meters) 11.0 6.1 10.5 21.4 22.7 Average sales realizations ($/cubic meters) 1,752 2,243 677 1,672 756 Pallets Production ('000 units) 2,895.1 2,747.2 - 8,522.5 - Sales ('000 units) 2,765.3 2,882.7 - 8,590.4 - Average sales realizations ($/unit) 10 11 - 11 - Biofuels(5) Production ('000 tonnes) 52.1 43.6 - 128.3 - Sales ('000 tonnes) 38.7 40.4 - 105.0 - Average realizations ($/tonne) 294 254 - 284 - Average Spot Currency Exchange Rates $ / €(6) 1.0884 1.0888 1.0066 1.0835 1.0636 $ / C$(6) 0.7458 0.7447 0.7659 0.7433 0.7796 ______________
(1) Source: RISI pricing report. Europe and North America are list prices. China are net prices which include discounts, allowances and rebates.
(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) Does not include our 50% joint venture interest in the Cariboo mill, which is accounted for using the equity method.
(4) Manufactured products includes cross-laminated timber, glulam and finger joint lumber.
(5) Biofuels includes pellets and briquettes.
(6) 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 30,2023 2022 2023 2022 Revenues $ 470,821 $ 532,814 $ 1,523,350 $ 1,697,881 Costs and expenses Cost of sales, excluding depreciation and amortization 403,267 367,710 1,430,805 1,187,476 Cost of sales depreciation and amortization 40,884 32,122 128,485 95,223 Selling, general and administrative expenses 30,096 24,259 96,439 70,077 Operating income (loss) (3,426 ) 108,723 (132,379 ) 345,105 Other income (expenses) Interest expense (21,863 ) (17,935 ) (61,001 ) (52,731 ) Other income 3,317 7,252 9,689 24,297 Total other expenses, net (18,546 ) (10,683 ) (51,312 ) (28,434 ) Income (loss) before income taxes (21,972 ) 98,040 (183,691 ) 316,671 Income tax recovery (provision) (3,984 ) (31,294 ) 28,851 (89,656 ) Net income (loss) $ (25,956 ) $ 66,746 $ (154,840 ) $ 227,015 Net income (loss) per common share Basic $ (0.39 ) $ 1.01 $ (2.33 ) $ 3.43 Diluted $ (0.39 ) $ 1.00 $ (2.33 ) $ 3.41 Dividends declared per common share $ 0.075 $ 0.075 $ 0.225 $ 0.225 MERCER INTERNATIONAL INC.
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)September 30,
2023December 31,
2022ASSETS Current assets Cash and cash equivalents $ 343,725 $ 354,032 Accounts receivable, net 266,927 351,993 Inventories 422,151 450,470 Prepaid expenses and other 31,697 21,680 Total current assets 1,064,500 1,178,175 Property, plant and equipment, net 1,396,747 1,341,322 Investment in joint ventures 43,933 45,635 Amortizable intangible assets, net 50,322 61,497 Goodwill 33,921 30,937 Operating lease right-of-use assets 17,351 15,049 Pension asset 3,514 4,397 Other long-term assets 44,713 48,025 Total assets $ 2,655,001 $ 2,725,037 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable and other $ 267,343 $ 377,306 Pension and other post-retirement benefit obligations 523 755 Total current liabilities 267,866 378,061 Long-term debt 1,589,776 1,346,508 Pension and other post-retirement benefit obligations 10,768 12,178 Operating lease liabilities 11,593 9,475 Other long-term liabilities 14,158 14,072 Deferred income tax 95,388 125,959 Total liabilities 1,989,549 1,886,253 Shareholders’ equity Common shares $1 par value; 200,000,000 authorized; 66,525,000 issued and outstanding (2022 – 66,167,000) 66,471 66,132 Additional paid-in capital 358,055 354,495 Retained earnings 428,319 598,119 Accumulated other comprehensive loss (187,393 ) (179,962 ) Total shareholders’ equity 665,452 838,784 Total liabilities and shareholders’ equity $ 2,655,001 $ 2,725,037 MERCER INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)Three Months Ended
September 30,Nine Months Ended
September 30,2023 2022 2023 2022 Cash flows from (used in) operating activities Net income (loss) $ (25,956 ) $ 66,746 $ (154,840 ) $ 227,015 Adjustments to reconcile net income (loss) to cash flows from operating activities Depreciation and amortization 40,953 32,144 128,696 95,288 Deferred income tax provision (recovery) 9,520 620 (34,529 ) 15,627 Inventory impairment (recovery) (10,000 ) — 56,600 — Defined benefit pension plans and other post-retirement benefit plan expense 621 424 1,518 1,301 Stock compensation expense 1,754 1,214 4,367 3,680 Foreign exchange transaction gains (4,830 ) (11,283 ) (4,336 ) (24,702 ) Other 459 (3,726 ) (6,142 ) (4,497 ) Defined benefit pension plans and other post-retirement benefit plan contributions (251 ) (511 ) (1,816 ) (2,905 ) Changes in working capital Accounts receivable 65,592 (17,679 ) 89,102 (4,297 ) Inventories 8,543 (8,803 ) (19,011 ) (23,870 ) Accounts payable and accrued expenses (100,449 ) 34,323 (107,630 ) 37,569 Other (11,290 ) (6,809 ) (12,265 ) (10,198 ) Net cash from (used in) operating activities (25,334 ) 86,660 (60,286 ) 310,011 Cash flows from (used in) investing activities Purchase of property, plant and equipment (37,391 ) (48,554 ) (110,302 ) (128,875 ) Acquisition, net of cash acquired — (257,367 ) (82,100 ) (257,367 ) Property insurance proceeds 2,727 1,164 5,437 7,574 Proceeds from government grants 4,642 — 4,642 1,067 Purchase of term deposit — — — (75,000 ) Other 716 405 2,641 972 Net cash from (used in) investing activities (29,306 ) (304,352 ) (179,682 ) (451,629 ) Cash flows from (used in) financing activities Proceeds from issuance of senior notes 200,000 — 200,000 — Proceeds from (repayment of) revolving credit facilities, net (3,129 ) 99,065 51,278 116,503 Dividend payments (4,989 ) (4,962 ) (9,971 ) (9,922 ) Payment of debt issuance costs (4,552 ) (1,849 ) (4,552 ) (3,033 ) Payment of finance lease obligations (2,058 ) (1,640 ) (5,845 ) (8,246 ) Other (114 ) (27 ) (343 ) (593 ) Net cash from (used in) financing activities 185,158 90,587 230,567 94,709 Effect of exchange rate changes on cash and cash equivalents (131 ) (5,502 ) (906 ) (11,447 ) Net increase (decrease) in cash and cash equivalents 130,387 (132,607 ) (10,307 ) (58,356 ) Cash and cash equivalents, beginning of period 213,338 419,861 354,032 345,610 Cash and cash equivalents, end of period $ 343,725 $ 287,254 $ 343,725 $ 287,254 MERCER INTERNATIONAL INC.
COMPUTATION OF OPERATING EBITDA
(Unaudited)
(In thousands)Operating EBITDA is defined as operating income (loss) 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 (loss) 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 (loss), 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 (loss) or operating income (loss) as a measure of performance, nor as an alternative to net cash from (used in) operating activities as a measure of liquidity. The following tables set forth the net income (loss) to Operating EBITDA:
Q3 Q2 Q3 YTD YTD 2023 2023 2022 2023 2022 Net income (loss) $ (25,956 ) $ (98,306 ) $ 66,746 $ (154,840 ) $ 227,015 Income tax provision (recovery) 3,984 (27,479 ) 31,294 (28,851 ) 89,656 Interest expense 21,863 20,091 17,935 61,001 52,731 Other income (3,317 ) (3,138 ) (7,252 ) (9,689 ) (24,297 ) Operating income (loss) (3,426 ) (108,832 ) 108,723 (132,379 ) 345,105 Add: Depreciation and amortization 40,953 40,152 32,144 128,696 95,288 Operating EBITDA $ 37,527 $ (68,680 ) $ 140,867 $ (3,683 ) $ 440,393 
APPROVED BY: Jimmy S.H. Lee Executive Chairman (604) 684-1099 Juan Carlos Bueno Chief Executive Officer (604) 684-1099
