Mercer Earnings 2020-09-30

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

merc-10q_20200930.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 September 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 October 28, 2020.

PART I. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 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 September 30						Nine Months Ended September 30
	2020			2019			2020			2019
Revenues	$	333,151		$	383,536		$	1,024,945		$	1,293,239
Costs and expenses
Cost of sales, excluding depreciation and amortization		272,165			314,894			832,554			994,360
Cost of sales depreciation and amortization		31,862			31,934			94,952			94,108
Selling, general and administrative expenses		15,388			17,961			49,326			54,662
Operating income		13,736			18,747			48,113			150,109
Other income (expenses)
Interest expense		(19,864	)		(18,183	)		(60,056	)		(55,103	)
Other income		11,898			887			12,136			3,177
Total other expenses, net		(7,966	)		(17,296	)		(47,920	)		(51,926	)
Income before income taxes		5,770			1,451			193			98,183
Income tax recovery (provision)		1,775			(244	)		(4,451	)		(35,101	)
Net income (loss)	$	7,545		$	1,207		$	(4,258	)	$	63,082
Net income (loss) per common share
Basic and diluted	$	0.11		$	0.02		$	(0.06	)	$	0.96
Dividends declared per common share	$	0.0650		$	0.1375		$	0.2675		$	0.4000

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands of U.S. dollars)

	Three Months Ended September 30					Nine Months Ended September 30
	2020		2019			2020			2019
Net income (loss)	$	7,545	$	1,207		$	(4,258	)	$	63,082
Other comprehensive income (loss), net of taxes
Foreign currency translation adjustment		52,280		(48,538	)		21,488			(28,285	)
Change in unrecognized losses and prior service costs related to defined benefit pension plans, net of tax of $nil (2019 - $7 and $43, respectively)		8		39			31			134
Other comprehensive income (loss), net of taxes		52,288		(48,499	)		21,519			(28,151	)
Total comprehensive income (loss)	$	59,833	$	(47,292	)	$	17,261		$	34,931

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)

	September 30,			December 31,
	2020			2019
ASSETS
Current assets
Cash and cash equivalents	$	345,580		$	351,085
Accounts receivable, net		202,619			208,740
Inventories		269,864			272,599
Prepaid expenses and other		16,417			12,273
Total current assets		834,480			844,697
Property, plant and equipment, net		1,065,345			1,074,242
Investment in joint ventures		47,865			53,122
Amortizable intangible assets, net		50,132			53,371
Operating lease right-of-use assets		12,932			13,004
Other long-term assets		32,744			26,038
Deferred income tax		1,237			1,246
Total assets	$	2,044,735		$	2,065,720
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and other	$	199,992		$	255,544
Pension and other post-retirement benefit obligations		724			768
Total current liabilities		200,716			256,312
Debt		1,124,202			1,087,932
Pension and other post-retirement benefit obligations		24,613			25,489
Finance lease liabilities		39,741			31,103
Operating lease liabilities		9,912			10,520
Other long-term liabilities		14,213			14,114
Deferred income tax		80,631			89,847
Total liabilities		1,494,028			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		345,583			344,994
Retained earnings		234,365			256,371
Accumulated other comprehensive loss		(95,041	)		(116,560	)
Total shareholders’ equity		550,707			550,403
Total liabilities and shareholders’ equity	$	2,044,735		$	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 September 30:
Balance as of June 30, 2020		65,868	$	65,800	$	344,688	$	231,101		$	(147,329	)	$	494,260
Stock compensation expense		—		—		895		—			—			895
Net income		—		—		—		7,545			—			7,545
Dividends declared		—		—		—		(4,281	)		—			(4,281	)
Other comprehensive income		—		—		—		—			52,288			52,288
Balance as of September 30, 2020		65,868	$	65,800	$	345,583	$	234,365		$	(95,041	)	$	550,707

Balance as of June 30, 2019		65,629	$	65,598	$	342,815	$	345,934		$	(107,822	)	$	646,525
Stock compensation expense		—		—		1,179		—			—			1,179
Net income		—		—		—		1,207			—			1,207
Dividends declared		—		—		—		(9,025	)		—			(9,025	)
Other comprehensive loss		—		—		—		—			(48,499	)		(48,499	)
Balance as of September 30, 2019		65,629	$	65,598	$	343,994	$	338,116		$	(156,321	)	$	591,387

Nine Months Ended September 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 expense	—			—			815			—			—			815
Net loss	—			—			—			(4,258	)		—			(4,258	)
Dividends declared	—			—			—			(17,610	)		—			(17,610	)
Repurchase of common shares	(24	)		(24	)		—			(138	)		—			(162	)
Other comprehensive income	—			—			—			—			21,519

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	2020-09-30	Filed 2020-10-29
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	2020-09-30	Earnings, Other Events, Exhibits
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_7.htm
EX-31.2	merc-ex312_6.htm
EX-32.1	merc-ex321_9.htm
EX-32.2	merc-ex322_8.htm

MERC 10Q Quarterly Report

Mercer Earnings 2020-09-30