Mercer Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

merc-10q_20200630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File No.: 000-51826

MERCER INTERNATIONAL INC.

(Exact name of Registrant as specified in its charter)

Washington		47-0956945
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

Suite 1120, 700 West Pender Street, Vancouver, British Columbia, Canada, V6C 1G8

(Address of office)

(604) 684-1099

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $1.00 per share

MERC

NASDAQ Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "non-accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The Registrant had 65,868,086 shares of common stock outstanding as of July 29, 2020.

PART I. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(Unaudited)

FORM 10-Q

QUARTERLY REPORT - PAGE 2

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands of U.S. dollars, except per share data)

	Three Months Ended June 30						Six Months Ended June 30
	2020			2019			2020			2019
Revenues	$	341,195		$	425,753		$	691,794		$	909,703
Costs and expenses
Cost of sales, excluding depreciation and amortization		284,333			336,433			560,389			679,466
Cost of sales depreciation and amortization		30,179			32,038			63,090			62,174
Selling, general and administrative expenses		16,368			19,472			33,938			36,701
Operating income		10,315			37,810			34,377			131,362
Other income (expenses)
Interest expense		(20,108	)		(18,369	)		(40,192	)		(36,920	)
Other income		2,264			1,251			238			2,290
Total other expenses, net		(17,844	)		(17,118	)		(39,954	)		(34,630	)
Income (loss) before provision for income taxes		(7,529	)		20,692			(5,577	)		96,732
Provision for income taxes		(882	)		(10,433	)		(6,226	)		(34,857	)
Net income (loss)	$	(8,411	)	$	10,259		$	(11,803	)	$	61,875
Net income (loss) per common share
Basic and diluted	$	(0.13	)	$	0.16		$	(0.18	)	$	0.94
Dividends declared per common share	$	0.0650		$	0.1375		$	0.2025		$	0.2625

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands of U.S. dollars)

	Three Months Ended June 30					Six Months Ended June 30
	2020			2019		2020			2019
Net income (loss)	$	(8,411	)	$	10,259	$	(11,803	)	$	61,875
Other comprehensive income (loss), net of taxes
Foreign currency translation adjustment		44,202			24,125		(30,792	)		20,253
Change in unrecognized losses and prior service costs related to defined benefit pension plans, net of tax of $nil (2019 - $30 and $36, respectively)		17			35		23			95
Other comprehensive income (loss), net of taxes		44,219			24,160		(30,769	)		20,348
Total comprehensive income (loss)	$	35,808		$	34,419	$	(42,572	)	$	82,223

See accompanying Notes to the Interim Consolidated Financial Statements.

FORM 10-Q

QUARTERLY REPORT - PAGE 3

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

	June 30,			December 31,
	2020			2019
ASSETS
Current assets
Cash and cash equivalents	$	303,334		$	351,085
Accounts receivable, net		209,184			208,740
Inventories		261,453			272,599
Prepaid expenses and other		9,665			12,273
Total current assets		783,636			844,697
Property, plant and equipment, net		1,040,171			1,074,242
Investment in joint ventures		48,413			53,122
Amortizable intangible assets, net		49,893			53,371
Operating lease right-of-use assets		12,866			13,004
Other long-term assets		37,414			26,038
Deferred income tax		1,216			1,246
Total assets	$	1,973,609		$	2,065,720
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and other	$	196,238		$	255,544
Pension and other post-retirement benefit obligations		716			768
Total current liabilities		196,954			256,312
Debt		1,114,069			1,087,932
Pension and other post-retirement benefit obligations		24,044			25,489
Finance lease liabilities		38,628			31,103
Operating lease liabilities		10,052			10,520
Other long-term liabilities		13,733			14,114
Deferred income tax		81,869			89,847
Total liabilities		1,479,349			1,515,317
Shareholders’ equity
Common shares $1 par value; 200,000,000 authorized; 65,868,000 issued and outstanding (2019 – 65,629,000)		65,800			65,598
Additional paid-in capital		344,688			344,994
Retained earnings		231,101			256,371
Accumulated other comprehensive loss		(147,329	)		(116,560	)
Total shareholders’ equity		494,260			550,403
Total liabilities and shareholders’ equity	$	1,973,609		$	2,065,720

Commitments and contingencies (Note 13)
Subsequent event (Note 7)

See accompanying Notes to the Interim Consolidated Financial Statements.

FORM 10-Q

QUARTERLY REPORT - PAGE 4

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)

(In thousands of U.S. dollars)

	Common shares
	Number (thousands of shares)			Amount, at Par Value			Additional Paid -in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
Three Months Ended June 30:
Balance as of March 31, 2020		65,800		$	65,769		$	344,753		$	243,794		$	(191,548	)	$	462,768
Shares issued on grants of restricted shares		68			31			(31	)		—			—			—
Stock compensation recovery		—			—			(34	)		—			—			(34	)
Net loss		—			—			—			(8,411	)		—			(8,411	)
Dividends declared		—			—			—			(4,282	)		—			(4,282	)
Other comprehensive income		—			—			—			—			44,219			44,219
Balance as of June 30, 2020		65,868		$	65,800		$	344,688		$	231,101		$	(147,329	)	$	494,260

Balance as of March 31, 2019		65,651		$	65,620		$	341,644		$	345,400		$	(131,982	)	$	620,682
Shares issued on grants of restricted shares		31			31			(31	)		—			—			—
Stock compensation expense		—			—			1,202			—			—			1,202
Net income		—			—			—			10,259			—			10,259
Dividends declared		—			—			—			(9,024	)		—			(9,024	)
Repurchase of common shares		(53	)		(53	)		—			(701	)		—			(754	)
Other comprehensive income		—			—			—			—			24,160			24,160
Balance as of June 30, 2019		65,629		$	65,598		$	342,815		$	345,934		$	(107,822	)	$	646,525

Six Months Ended June 30:
Balance as of December 31, 2019	65,629	$	65,598	$	344,994		$	256,371		$	(116,560	)	$	550,403
Shares issued on grants of restricted shares	68		31		(31	)		—			—			—
Shares issued on grants of performance share units	195		195		(195	)		—			—			—
Stock compensation recovery	—		—		(80	)		—			—			(80	)
Net loss	—		—		—			(11,803	)		—			(11,803	)
Dividends declared

Price	12.46	EPS	1
Shares	66	P/E	13
MCap	822	P/FCF	4
Net Debt	735	EBIT	161
TEV	1,557	TEV/EBIT	10
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-07-31
10-Q	2020-03-31	Filed 2020-04-30
10-K	2019-12-31	Filed 2020-02-13
10-Q	2019-09-30	Filed 2019-10-31
10-Q	2019-06-30	Filed 2019-08-01
10-Q	2019-03-31	Filed 2019-05-02
10-K	2018-12-31	Filed 2019-02-14
10-Q	2018-09-30	Filed 2018-10-25
10-Q	2018-06-30	Filed 2018-07-26
10-Q	2018-03-31	Filed 2018-05-03
10-K	2017-12-31	Filed 2018-02-16
10-Q	2017-09-30	Filed 2017-10-26
10-Q	2017-06-30	Filed 2017-07-27
10-Q	2017-03-31	Filed 2017-04-28
10-K	2016-12-31	Filed 2017-02-10
10-Q	2016-09-30	Filed 2016-10-27
10-Q	2016-06-30	Filed 2016-07-28
10-Q	2016-03-31	Filed 2016-04-28
10-K	2015-12-31	Filed 2016-02-12
10-Q	2015-09-30	Filed 2015-10-29
10-Q	2015-06-30	Filed 2015-07-30
10-Q	2015-03-31	Filed 2015-04-30
10-K	2014-12-31	Filed 2015-02-13
10-Q	2014-09-30	Filed 2014-10-31
10-Q	2014-06-30	Filed 2014-08-01
10-Q	2014-03-31	Filed 2014-05-02
10-K	2013-12-31	Filed 2014-02-21
10-Q	2013-09-30	Filed 2013-11-01
10-Q	2013-06-30	Filed 2013-08-02
10-Q	2013-03-31	Filed 2013-05-03
10-K	2012-12-31	Filed 2013-02-15
10-Q	2012-09-30	Filed 2012-11-02
10-Q	2012-06-30	Filed 2012-08-03
10-Q	2012-03-31	Filed 2012-05-07
10-K	2011-12-31	Filed 2012-02-21
10-Q	2011-09-30	Filed 2011-11-07
10-Q	2011-06-30	Filed 2011-08-04
10-Q	2011-03-31	Filed 2011-05-09
10-K	2010-12-31	Filed 2011-02-17
10-Q	2010-09-30	Filed 2010-11-04
10-Q	2010-06-30	Filed 2010-08-05
10-Q	2010-03-31	Filed 2010-05-04
10-K	2009-12-31	Filed 2010-02-26

8-K	2020-06-30	Earnings, Other Events, Exhibits
8-K	2020-06-22
8-K	2020-05-29
8-K	2020-05-15
8-K	2020-03-31
8-K	2020-02-13
8-K	2019-10-31
8-K	2019-10-03
8-K	2019-09-19
8-K	2019-09-19
8-K	2019-08-01
8-K	2019-05-31
8-K	2019-05-02
8-K	2019-04-16
8-K	2019-02-14
8-K	2018-12-19
8-K	2018-12-10
8-K	2018-12-07
8-K	2018-11-29
8-K	2018-11-28
8-K	2018-10-25
8-K	2018-10-03
8-K	2018-07-26
8-K	2018-06-01
8-K	2018-05-25
8-K	2018-05-03
8-K	2018-02-15
8-K	2018-01-01

EX-31.1	merc-ex311_6.htm
EX-31.2	merc-ex312_9.htm
EX-32.1	merc-ex321_7.htm
EX-32.2	merc-ex322_8.htm

MERC 10Q Quarterly Report

Mercer Earnings 2020-06-30