Selected Highlights
- Second quarter Operating EBITDA* of negative $21.0 million (net loss of $76.0 million), including a non-cash inventory impairment of $29.0 million, compared to negative $20.9 million (net loss of $86.1 million) in the same quarter of 2025
- Implementing operational restructuring at the Torgau facility to align its capacity and operational profile to current market conditions, with the goal of ensuring an economically viable future for the facility
- Continued efforts to improve our balance sheet and optimize working capital. "One Goal One Hundred" program remains on track to achieve $100 million of cost savings and operational efficiencies by year end, with additional cost savings of $13.0 million in second quarter and a total of approximately $54.0 million to date since launch in April 2025
- Engaged advisors and key stakeholders to pursue and evaluate a range of strategic alternatives to address debt maturities, enhance liquidity and strengthen our capital structure
NEW YORK, Aug. 06, 2026 (GLOBE NEWSWIRE) -- Mercer International Inc. (Nasdaq: MERC) today reported second quarter 2026 Operating EBITDA of negative $21.0 million, a decrease from negative $20.9 million in the same quarter of 2025 and positive $7.8 million in the first quarter of 2026.
In the second quarter of 2026, net loss was $76.0 million ($1.13 per share) compared to $86.1 million ($1.29 per share) in the same quarter of 2025 and $52.0 million ($0.78 per share) in the first quarter of 2026.
Mr. Juan Carlos Bueno, Chief Executive Officer, stated: "Our pulp sales realizations remained steady this quarter, as continued economic uncertainty delayed market recovery. Our second quarter results were also weighed down by rising European fiber costs, driven by regional supply shortages and intense competition for sawmill residuals from energy producers. As a result, we recognized a non-cash impairment of $29.0 million primarily against pulp and fiber inventory.
In response to ongoing economic uncertainty and weak market conditions, we have been actively evaluating strategic alternatives and are proactively taking steps to enhance our liquidity and strengthen our balance sheet. As previously announced, our existing special committee of independent directors continues to oversee, review, and evaluate the development and implementation of potential alternatives to improve our capital structure.
To assist in these matters, we have engaged advisors to review strategic alternatives and broader financing initiatives. As part of this process, we have entered into discussions with holders of our 2028 and 2029 senior notes, as well as other stakeholders across our capital structure, regarding potential financing and other liquidity-enhancing transactions. These discussions remain ongoing and we continue to evaluate a range of alternatives with the objective of achieving a comprehensive solution that supports our long-term business plan. No agreement has been reached with any stakeholder group, and there can be no assurance the discussions referenced above will result in any particular transaction or that any transaction, if pursued, will be completed.
We continue to pursue our "One Goal One Hundred" program and remain confident that we will achieve our targeted $100 million in cost savings and operational efficiencies by year end. With $13.0 million in cost savings realized this quarter, we have achieved a total of approximately $54.0 million since its launch in April 2025. The program is part of our broader initiatives to improve our balance sheet and preserve cash, including efforts to reduce capital expenditures and optimize working capital.
Like many industry participants, Mercer Torgau has been impacted by global economic uncertainty and heightened raw material and energy costs. To address these dynamics, the facility has taken various comprehensive measures to enhance operations, including the installation of new scanning technology to increase production of higher-value, on-grade dimensional lumber and expand exports to the U.S. It also recently announced additional strategic actions designed to align its capacity and operational profile with market conditions. These include a reduction in its workforce and adjustments to its product portfolio. An initial reduction of approximately 100 contractor positions was completed in July 2026, and Mercer Torgau expects an overall workforce reduction of approximately 350 positions as the initiative is completed in stages through the second quarter of 2027.
Looking ahead, ongoing geopolitical conflicts, including in the Middle East and Ukraine, are expected to exert inflationary pressures on fiber, freight and other production costs for our pulp and solid wood segments. While direct tariff impacts have been immaterial to date, we continue to monitor events as indirect impacts reshape global supply dynamics. On the supply-side, we are starting to see responses to prevailing market conditions, supporting our current expectation of more balanced markets toward the end of 2026.
Per unit fiber costs for our pulp and solid wood segments increased in the second quarter of 2026 compared to the first quarter of 2026, driven by supply constraints and strong demand in Germany. For the third quarter of 2026, per unit fiber costs are expected to remain elevated at our German mills with a slight increase at our pulp mills. This increase is driven by continued strong demand for wood as an energy source as a result of ongoing geopolitical conflicts. We expect to see a modest decrease in per unit fiber costs at our sawmills and Canadian pulp mills as regional curtailments improve their fiber supply.
We had relatively stable pulp production in the second quarter of 2026 compared to the first quarter. However, we strategically reduced production at our German mills by approximately 26,000 tonnes due to fiber constraints and expect these reductions to continue into the third quarter. We had no annual planned maintenance downtime in the second quarter of 2026 and expect a total of 40 days of annual planned maintenance downtime at our pulp mills in the third quarter of 2026.
In the second quarter of 2026, overall pulp prices were relatively steady compared to the first quarter of 2026 as weak demand was balanced by scheduled maintenance and curtailments. Looking ahead to the third quarter, we expect softwood pulp prices across all our markets to be slightly lower as the positive impacts of recent supply reductions are offset by lower seasonal demand. We expect hardwood pulp pricing to modestly decrease in the third quarter as global supply constraints ease.
In the second quarter of 2026, our lumber sales realizations increased compared to the first quarter of 2026 driven by low customer inventory levels and sawmill curtailments in the U.S. While supply also contracted in Europe, continued weak demand limited the positive impact on lumber pricing in the market. Overall demand is expected to remain weak in the third quarter of 2026 due to high U.S. interest rates and continued European economic headwinds. We are, however, seeing an upward trend in North American lumber prices driven by lower customer inventory levels and capacity curtailments. As conditions improve, we expect a strong recovery, with pent-up demand and supply constraints driving further price increases. The order book and commitments for our mass timber business are robust, at approximately $151 million at the end of the second quarter, anchored by large-scale data center infrastructure projects. We expect these contracts to begin contributing to our results as they commence in late 2026 and into 2027."
Mr. Bueno concluded: "As economic headwinds and geopolitical volatility persist, our immediate priorities are managing costs, maintaining our liquidity, and optimizing our capital structure. The proactive steps we are taking have the goal of strengthening our balance sheet and positioning us to capitalize as market conditions improve. "
______________
*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 loss to Operating EBITDA.
Consolidated Financial Results
Q2 Q1 Q2 YTD YTD 2026 2026 2025 2026 2025 (in thousands, except per share amounts) Revenues$460,278 $489,304 $453,524 $949,582 $960,498 Operating loss$(58,974) $(32,892) $(58,404) $(91,866) $(51,671)Operating EBITDA$(20,993) $7,848 $(20,881) $(13,145) $26,207 Net loss$(75,978) $(51,996) $(86,071) $(127,974) $(108,410)Net loss per common share Basic$(1.13) $(0.78) $(1.29) $(1.91) $(1.62)Diluted$(1.13) $(0.78) $(1.29) $(1.91) $(1.62)Consolidated – Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Total revenues for the second quarter of 2026 remained relatively steady at $460.3 million compared to $453.5 million in the same period of 2025, as higher sales realizations for our solid wood products and higher pulp sales volumes were mostly offset by lower pulp sales realizations.
Costs and expenses in the second quarter of 2026 were generally flat at $519.3 million compared to $511.9 million in the same period of 2025. In the second quarter of 2026, higher per unit fiber costs were mostly offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the second quarter of 2026, costs and expenses included a non-cash impairment of $29.0 million primarily against pulp and fiber inventory as a result of low pulp prices and high fiber costs. In the same period of 2025, costs and expenses included a non-cash impairment of $11.0 million against hardwood inventory at our Peace River mill.
In the second quarter of 2026, Operating EBITDA was negative $21.0 million compared to negative $20.9 million in the same period of 2025. In the second quarter of 2026, higher per unit fiber costs and lower pulp sales realizations were mostly offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the second quarter of 2026, Operating EBITDA included a non-cash inventory impairment of $29.0 million compared to $11.0 million in the same period of 2025.
Segment Results
Pulp
Three Months Ended June 30, 2026 2025 (in thousands) Pulp revenues$303,340 $313,705 Energy and chemical revenues
$21,734 $18,603 Segment Operating EBITDA(1)
$(12,651) $(10,262)
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(1) Segment Operating EBITDA is a measure of segment profit or loss presented in our financial statements under GAAP. Refer to the segment information note in our consolidated financial statements for more information.
In the second quarter of 2026, Segment Operating EBITDA for our pulp segment was negative $12.7 million compared to negative $10.3 million in the same period of 2025. This primarily resulted from lower pulp sales realizations and higher per unit fiber costs. These adverse effects were partially offset by the impact of lower planned maintenance downtime, the benefits of our cost reduction initiatives, and the positive foreign exchange impact from a stronger dollar. In the second quarter of 2026, Segment Operating EBITDA also included a non-cash inventory impairment of $26.0 million compared to $11.0 million in the same period of 2025.
Pulp segment revenues, comprised of pulp, energy and chemical revenues, in the second quarter of 2026 modestly decreased to $325.1 million from $332.3 million in the same period of 2025 due to lower pulp revenues.
Pulp revenues in the second quarter of 2026 modestly decreased to $303.3 million from $313.7 million in the same period of 2025 as a result of lower sales realizations, partially offset by higher sales volume.
In the second quarter of 2026, the third-party industry quoted average list price for NBSK pulp in Europe increased from the same period of 2025 primarily due to supply constraints. In the second quarter of 2026, the third-party industry quoted average list price in North America and net price in China for NBSK pulp both decreased compared to the same period of 2025. The decrease was primarily due to weak demand driven by the current economic climate and, in China, an oversupplied paper market. Our average NBSK pulp sales realizations in the second quarter of 2026 decreased by approximately 10% to $682 per ADMT from $758 per ADMT in the same period of 2025. This decrease was primarily due to lower pricing in North America and China, while higher list prices in Europe were offset by increased customer discounts.
In the second quarter of 2026, the third-party industry quoted average list price in North America and net price in China for NBHK pulp both increased from the same period of 2025, primarily due to global supply constraints. In the second quarter of 2026, average NBHK pulp sales realizations increased by approximately 6% to $607 per ADMT from $575 per ADMT in the same period of 2025, driven by higher prices in all our markets.
Total pulp sales volumes in the second quarter of 2026 increased by approximately 6% to 450,329 ADMTs from 426,731 ADMTs in the same period of 2025 driven by the timing of sales.
Energy and chemical revenues in the second quarter of 2026 increased by approximately 17% to $21.7 million from $18.6 million in the same period of 2025. This increase was primarily due to higher sales realizations, partially offset by lower sales volumes.
In the second quarter of 2026, cost and expenses modestly decreased to $362.9 million from $368.7 million in the same period of 2025. This decrease was primarily due to lower planned maintenance downtime, our cost reduction initiatives and the positive foreign exchange impact from a stronger dollar. These decreases were partially offset by higher per unit fiber costs and higher pulp sales volumes. In the second quarter of 2026, costs and expenses included a non-cash inventory impairment of $26.0 million compared to $11.0 million in the same period of 2025.
Total pulp production in the second quarter of 2026 was relatively flat at 455,769 ADMTs compared to 457,117 ADMTs in the same period of 2025. Our German pulp mills reduced production during the quarter in response to high fiber prices, but this was offset by there being no planned maintenance downtime in the second quarter of 2026 compared to 23 days (approximately 33,200 ADMTs) at our pulp mills in the same period of 2025. Pulp production at our German mills is expected to remain at reduced levels in the third quarter of 2026 due to ongoing high fiber costs.
Overall average per unit fiber costs in the second quarter of 2026 increased by approximately 14% compared to the same period of 2025 primarily due to higher costs in Germany. These higher costs were driven by reduced supply, and strong demand for wood as an energy source as a result of ongoing geopolitical conflicts. For the third quarter of 2026, per unit fiber costs for our German pulp mills are expected to slightly increase due to continued strong demand. For our Canadian pulp mills, per unit fiber costs are expected to modestly decrease as supply improves.
Solid Wood
Three Months Ended June 30, 2026 2025 (in thousands) Lumber revenues$56,643 $66,332 Manufactured products revenues(1)
$25,821 $12,418 Pallet revenues
$31,908 $26,586 Biofuels revenues(2)
$10,724 $5,095 Energy revenues
$6,296 $4,242 Wood residuals revenues
$2,811 $2,595 Segment Operating EBITDA(3)
$(8,238) $(4,861)
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(1) Manufactured products primarily include cross-laminated timber ("CLT") and glue-laminated timber ("glulam").
(2) Biofuels include pellets and briquettes.
(3) Segment Operating EBITDA is a measure of segment profit or loss presented in our financial statements under GAAP. Refer to the segment information note in our consolidated financial statements for more information.
In the second quarter of 2026, Segment Operating EBITDA for the solid wood segment was negative $8.2 million compared to negative $4.9 million in the same period of 2025. This decrease primarily resulted from higher per unit fiber costs partially offset by higher sales realizations for all our products.
Solid wood segment revenues in the second quarter of 2026 increased by approximately 14% to $134.2 million from $117.3 million in the same period of 2025 as a result of higher revenue from all product categories except for lumber.
In the second quarter of 2026, lumber revenues decreased by approximately 15% to $56.6 million from $66.3 million in the same period of 2025 as a result of lower sales volumes. Average lumber sales realizations in the second quarter of 2026 modestly increased to $565 per Mfbm from $550 per Mfbm in the same period of 2025. This increase was primarily due to lower customer inventory levels in the U.S. The U.S. market accounted for approximately 49% of our lumber revenues and approximately 43% of our lumber sales volumes in the second quarter of 2026. The balance of our lumber sales were mainly to Europe.
Lumber sales volumes in the second quarter of 2026 decreased by approximately 17% to 100.3 MMfbm from 120.6 MMfbm in the same period of 2025 driven by the timing of sales.
In the second quarter of 2026, manufactured products revenues were $25.8 million compared to $12.4 million in the same period of 2025. This increase was primarily driven by higher sales volumes and realizations. Manufactured products sales realizations increased by approximately 67% to $2,206 per cubic meter in the second quarter of 2026 from $1,318 per cubic meter in the same period of 2025 driven by a shift in mass timber construction activity toward higher-value projects.
Lumber production in the second quarter of 2026 was relatively stable at 123.8 MMfbm compared to 120.2 MMfbm in the same period of 2025.
Fiber costs were approximately 85% of our lumber cash production costs in the second quarter of 2026. In the second quarter of 2026, per unit fiber costs for lumber production increased by approximately 28% compared to the same period of 2025 due to reduced supply and strong demand. For the third quarter of 2026, we currently expect per unit fiber costs to modestly decrease as sawlog availability improves.
Consolidated – Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Total revenues for the first half of 2026 were relatively flat at $949.6 million compared to $960.5 million in the same period of 2025.
Costs and expenses in the first half of 2026 modestly increased to $1,041.4 million from $1,012.2 million in the same period of 2025. This increase was primarily due to higher per unit fiber costs and negative foreign exchange impact from a weaker dollar on our euro and Canadian dollar-denominated costs and expenses. These adverse impacts were partially offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the first half of 2026, costs and expenses included inventory impairment charges of $51.0 million primarily against pulp and fiber inventory as a result of low pulp prices and high fiber costs. In the same period of 2025, costs and expenses included inventory impairment charges of $11.0 million against hardwood inventory at our Peace River mill.
In the first half of 2026, Operating EBITDA decreased to negative $13.1 million from positive $26.2 million in the same period of 2025. This decrease primarily resulted from lower pulp sales realizations and higher per unit fiber costs, partially offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the first half of 2026, Operating EBITDA also included inventory impairment charges of $51.0 million compared to $11.0 million in the same period of 2025.
Liquidity
As of June 30, 2026, we had cash and cash equivalents of $78.8 million. After taking into account the previously announced €70 million reduction in borrowing capacity under our German revolving credit facility, we had approximately $112.9 million available under our revolving credit facilities, bringing aggregate liquidity to approximately $191.7 million as of June 30, 2026. Please refer to our Quarterly Report on Form 10-Q for the period ended June 30, 2026, for further information regarding our liquidity as of June 30, 2026.
The following table is a summary of selected financial information as of the dates indicated:
June 30, December 31, 2026 2025 (in thousands) Cash and cash equivalents$78,775 $186,805 Working capital$182,474 $582,176 Total assets$1,869,907 $2,041,420 Current liabilities$600,876 $283,626 Long-term liabilities$1,367,005 $1,689,734 Total shareholders’ equity (deficit)$(97,974) $68,060Earnings 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 August 7, 2026 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/smtqn5ma 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 website 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 2.1 million tonnes of pulp, 1,023 million board feet of lumber, 210 thousand cubic meters of CLT, 45 thousand cubic meters of glulam, 17 million pallets and 230 thousand tonnes of biofuels. To obtain further information on the company, please visit its website 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, ability to refinance or obtain any necessary financing on acceptable terms in the future, 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.
APPROVED BY:
William D. McCartney
Chairman
(604) 684-1099
Juan Carlos Bueno
Chief Executive Officer
(604) 684-1099
-FINANCIAL TABLES FOLLOW-
Summary Financial Highlights
Q2 Q1 Q2 YTD YTD 2026 2026 2025 2026 2025 (in thousands, except per share amounts) Revenues from external customersPulp segment
$325,074 $344,983 $332,308 $670,057 $713,388 Solid wood segment
134,203 131,742 117,268 265,945 239,988 Corporate and other
1,001 12,579 3,948 13,580 7,122 Total revenues
$460,278 $489,304 $453,524 $949,582 $960,498 Pulp Segment Operating EBITDA(1)
$(12,651) $6,897 $(10,262) $(5,754) $39,610 Solid wood Segment Operating EBITDA(1)
(8,238) (5,631) (4,861) (13,869) (5,153)Corporate and other
(104) 6,582 (5,758) 6,478 (8,250)Operating EBITDA(2)
$(20,993) $7,848 $(20,881) $(13,145) $26,207 Net loss
$(75,978) $(51,996) $(86,071) $(127,974) $(108,410)Net loss per common share
Basic
$(1.13) $(0.78) $(1.29) $(1.91) $(1.62)Diluted
$(1.13) $(0.78) $(1.29) $(1.91) $(1.62)Common shares outstanding at period end
67,019 66,983 66,983 67,019 66,983
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(1) Segment Operating EBITDA is a measure of segment profit or loss presented in our financial statements under GAAP. Refer to the segment information note in our consolidated financial statements for more information.
(2) Operating EBITDA is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. See page 6 of the financial tables included in this press release for a reconciliation of net loss to Operating EBITDA.
Summary Operating Highlights
Q2 Q1 Q2 YTD YTD 2026 2026 2025 2026 2025 Pulp SegmentPulp production ('000 ADMTs)
NBSK
390.0 362.5 403.2 752.5 773.6 NBHK
65.8 103.2 53.9 169.0 142.4 Annual maintenance downtime ('000 ADMTs)
— — 33.2 — 62.9 Annual maintenance downtime (days)
— — 23 — 45 Pulp sales ('000 ADMTs)
NBSK
368.8 385.1 361.4 753.8 749.5 NBHK
81.6 85.6 65.3 167.2 155.1 Average NBSK pulp prices ($/ADMT)(1)
Europe
1,655 1,618 1,553 1,637 1,552 China
658 685 734 672 764 North America
1,577 1,563 1,820 1,570 1,787 Average NBHK pulp prices ($/ADMT)(1)
China
602 595 533 598 556 North America
1,495 1,338 1,310 1,417 1,289 Average pulp sales realizations ($/ADMT)(2)
NBSK
682 696 758 689 771 NBHK
607 564 575 585 572 Energy production ('000 MWh)
483.0 544.6 511.1 1,027.6 1,038.1 Energy sales ('000 MWh)
162.3 179.3 183.1 341.6 381.8 Average energy sales realizations ($/MWh)
109 123 83 117 96 Solid Wood Segment
Lumber
Production (MMfbm)
123.8 115.9 120.2 239.8 248.2 Sales (MMfbm)
100.3 112.1 120.6 212.5 251.5 Average sales realizations ($/Mfbm)
565 536 550 549 524 Energy
Production and sales ('000 MWh)
43.3 38.0 32.7 81.3 68.8 Average sales realizations ($/MWh)
145 147 130 146 132 Manufactured products(3)
Production ('000 cubic meters)
11.0 7.9 7.8 18.9 14.9 Sales ('000 cubic meters)
11.0 10.7 8.1 21.7 14.0 Average sales realizations ($/cubic meter)
2,206 1,801 1,318 2,007 1,955 Pallets
Production ('000 units)
2,314.8 2,433.3 2,132.9 4,748.1 4,229.3 Sales ('000 units)
2,418.3 2,381.3 2,248.0 4,799.6 4,376.8 Average sales realizations ($/unit)
13 13 12 13 11 Biofuels(4)
Production ('000 tonnes)
37.3 35.4 25.2 72.7 69.7 Sales ('000 tonnes)
34.6 38.1 19.6 72.6 59.9 Average sales realizations ($/tonne)
310 320 260 315 239 Average Spot Currency Exchange Rates
$ / €(5)
1.1632 1.1701 1.1342 1.1666 1.0943 $ / C$(5)
0.7229 0.7292 0.7225 0.7260 0.7099
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(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.
(3) Manufactured products primarily include CLT and glulam.
(4) Biofuels include pellets and briquettes.
(5) Average Federal Reserve Bank of New York Noon Buying Rates over the reporting period.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenues $460,278 $453,524 $949,582 $960,498 Costs and expenses Cost of sales, excluding depreciation and amortization 449,798 444,047 902,783 874,294 Cost of sales depreciation and amortization 37,903 37,451 78,569 77,741 Selling, general and administrative expenses 31,551 30,430 60,096 60,134 Operating loss (58,974) (58,404) (91,866) (51,671)Other income (expenses) Interest expense (30,920) (28,411) (60,021) (56,566)Other income (expenses) 503 (1,120) 2,323 (1,305)Total other expenses, net (30,417) (29,531) (57,698) (57,871)Loss before income taxes (89,391) (87,935) (149,564) (109,542)Income tax recovery 13,413 1,864 21,590 1,132 Net loss $(75,978) $(86,071) $(127,974) $(108,410)Net loss per common share Basic $(1.13) $(1.29) $(1.91) $(1.62)Diluted $(1.13) $(1.29) $(1.91) $(1.62)Dividends declared per common share $— $0.075 $— $0.150
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
June 30,
2026 December 31,
2025 ASSETS Current assets Cash and cash equivalents $78,775 $186,805 Restricted cash 5,000 — Accounts receivable, net 308,554 298,889 Inventories 375,301 359,401 Prepaid expenses and other 15,720 20,707 Total current assets 783,350 865,802 Property, plant and equipment, net 1,028,469 1,115,490 Amortizable intangible assets, net 24,335 26,110 Operating lease right-of-use assets 5,696 6,818 Pension asset 11,328 12,975 Deferred income tax assets 4,929 7,839 Other long-term assets 11,800 6,386 Total assets $1,869,907 $2,041,420 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable and other $270,496 $269,217 Pension and other post-retirement benefit obligations 718 745 Current debt 329,662 13,664 Total current liabilities 600,876 283,626 Long-term debt 1,305,711 1,605,144 Pension and other post-retirement benefit obligations 10,786 10,392 Operating lease liabilities 3,048 3,858 Deferred income tax liabilities 33,079 58,298 Other long-term liabilities 14,381 12,042 Total liabilities 1,967,881 1,973,360 Shareholders’ equity Common shares $1 par value; 200,000,000 authorized; 67,018,000 issued and outstanding (2025 – 66,983,000) 67,083 66,871 Additional paid-in capital 365,066 365,357 Accumulated deficit (404,990) (277,016)Accumulated other comprehensive loss (125,133) (87,152)Total shareholders’ equity (deficit) (97,974) 68,060 Total liabilities and shareholders’ equity $1,869,907 $2,041,420
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Cash flows from (used in) operating activities Net loss $(75,978) $(86,071) $(127,974) $(108,410)Adjustments to reconcile net loss to cash flows from operating activities Depreciation and amortization 37,981 37,523 78,721 77,878 Deferred income tax recovery (13,254) (1,632) (21,263) (11,138)Inventory impairment 29,000 11,000 51,000 11,000 Defined benefit pension plans and other post-retirement benefit plan expense (income) (82) 175 (161) 344 Stock-based compensation (857) 1,036 (69) 2,042 Foreign exchange transaction losses (gains) (621) 9,361 (5,261) 17,779 Other 2,462 3,012 2,250 4,640 Changes in working capital Accounts receivable 18,580 31,588 (13,452) 14,790 Inventories (46,597) (17,175) (81,727) (24,066)Accounts payable and accrued expenses (87) (12,046) 12,579 16,386 Prepaid expenses and other 34,337 18,703 4,575 (8,760)Net cash used in operating activities (15,116) (4,526) (100,782) (7,515)Cash flows from (used in) investing activities Purchase of property, plant and equipment (12,164) (24,331) (25,330) (44,413)Proceeds from government grants 4,825 3,115 4,825 3,115 Other 821 (1,557) 1,162 (1,335)Net cash used in investing activities (6,518) (22,773) (19,343) (42,633)Cash flows from (used in) financing activities Proceeds from revolving credit facilities, net 24,153 3,607 30,001 25,361 Dividend payments — (5,015) — (5,015)Payment of finance lease obligations (3,753) (2,405) (7,316) (4,913)Other (4,551) 545 (5,078) 545 Net cash from (used in) financing activities 15,849 (3,268) 17,607 15,978 Effect of exchange rate changes on cash, cash equivalents and restricted cash 19 (4,407) (512) (4,256)Net decrease in cash, cash equivalents and restricted cash (5,766) (34,974) (103,030) (38,426)Cash, cash equivalents and restricted cash, beginning of period 89,541 181,473 186,805 184,925 Cash, cash equivalents and restricted cash, end of period $83,775 $146,499 $83,775 $146,499
MERCER INTERNATIONAL INC.
COMPUTATION OF OPERATING EBITDA
(Unaudited)
(In thousands)
Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and long-lived 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 long-lived asset impairment charges are not actual cash costs, 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, management believes 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, income taxes 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. Operating EBITDA is an internal measure and therefore may not be comparable to other companies.
Operating EBITDA is a non-GAAP financial measure at the consolidated level and is considered different from Operating EBITDA at the segment level, referred to as "Segment Operating EBITDA", which is our single measure of segment profit or loss presented in our financial statements under GAAP. For more information on Segment Operating EBITDA, refer to the segment information note within our consolidated financial statements.
The following table sets forth a reconciliation of net loss to Operating EBITDA for the periods indicated:
Q2 Q1 Q2 YTD YTD 2026 2026 2025 2026 2025 Net loss$(75,978) $(51,996) $(86,071) $(127,974) $(108,410)Income tax recovery (13,413) (8,177) (1,864) (21,590) (1,132)Interest expense 30,920 29,101 28,411 60,021 56,566 Other expenses (income) (503) (1,820) 1,120 (2,323) 1,305 Operating loss (58,974) (32,892) (58,404) (91,866) (51,671)Add: Depreciation and amortization 37,981 40,740 37,523 78,721 77,878 Operating EBITDA$(20,993) $7,848 $(20,881) $(13,145) $26,207