Selected Highlights
- Third quarter net income of $69.1 million and Record Operating EBITDA* of $148.1 million
- Start-Up of recently acquired cross-laminated timber facility in Spokane, Washington
NEW YORK, Oct. 28, 2021 -- Mercer International Inc. (Nasdaq: MERC) today reported third quarter 2021 Operating EBITDA increased to a record $148.1 million from $45.6 million in the third quarter of 2020 and from $83.8 million in the second quarter of 2021.
In the third quarter of 2021, net income was $69.1 million (or $1.05 per basic share and $1.04 per diluted share) compared to $7.5 million (or $0.11 per share) in the third quarter of 2020 and $21.4 million (or $0.32 per share) in the second quarter of 2021.
In the first nine months of 2021, Operating EBITDA increased to $313.9 million from $143.1 million in the same period of 2020. In the first nine months of 2021, net income was $96.5 million (or $1.46 per share) compared to a net loss of $4.3 million (or $0.06 per share) in the same period of 2020.
Mr. David Gandossi, the Chief Executive Officer, stated: “In October, we started up our recently acquired cross-laminated timber (“CLT”) manufacturing facility in Spokane, Washington and will be ramping up its production over the coming months. Our CLT facility has an annual production capacity of approximately 140,000 cubic meters of CLT, which represents about 30% of the current CLT manufacturing capacity in North America. We are excited about the potential of this business particularly as the benefits of this product, including environmental benefits, become more well known in the North American market. This business fits well with our core competencies, expands our product mix and moves us further up the value chain.
Overall, our third quarter pulp results were significantly improved over the second quarter due to much less planned maintenance downtime and higher sales volumes. Pulp pricing was generally mixed in the third quarter with modest improvements in Europe but weakening in China. Third quarter average European NBSK list prices increased by about $57 per ADMT and average net prices in China declined by about $130 per ADMT compared to the prior quarter. As of September 30, 2021, third party industry quoted NBSK list prices were approximately $1,345 ADMT in Europe and net prices were approximately $805 per ADMT in China.
In the third quarter, our Friesau sawmill’s production continued to benefit from our recent capital projects. Our solid wood segment generated operating income of $18.3 million in the third quarter despite a sharp decline in U.S. lumber prices in the period. In the third quarter, approximately 39% of lumber sales volumes were to the U.S.
While our operations have not been significantly impacted by the current global logistics bottleneck, we did have some delays in sales shipping dates and reduced availability of trucking which resulted in higher freight costs. We are currently optimistic that such logistics issues will be resolved over the coming months.
Looking ahead to the fourth quarter, we currently expect generally steady NBSK pulp demand in Europe but a weakening market in China. For hardwood pulp, we currently expect negative pricing pressure due to the incremental supply expected to come on-line in the later part of the fourth quarter.
With respect to our solid wood segment, in the fourth quarter we currently expect lumber demand to remain steady in all markets, with continued modest price improvements in the U.S. market and downward price pressure in the European market.
In 2021, we have continued to implement capital projects designed to deliver high returns and help us achieve our ESG objectives. These included the expansion of our Stendal mill's pulp and green energy production capacity and new woodroom projects at our Celgar and Peace River mills. Currently we expect our 2021 capital expenditures will be approximately $150 million.
Finally, while the global roll-out of vaccines is ongoing, COVID-19 infections and health risks, including from variants, continue especially in unvaccinated populations. Consequently, we will maintain our measures and procedures put in place to protect our people and allow us to operate our business safely and efficiently.”
Source: Mercer International
