Mercer Int’l Falls on Earnings Miss Despite Revenue Beat

NEW YORK – Mercer International Inc. (NASDAQ:) experienced a 2.5% decline in its stock following the release of its first-quarter financial results, which revealed a larger-than-expected loss per share. The company reported a net loss of -$0.25 per share, falling short of the analyst consensus of -$0.12 per share. However, Mercer’s revenue for the quarter exceeded expectations, coming in at $553 million compared to the projected $503 million.

In comparison to the first quarter of the previous year, Mercer’s Operating EBITDA saw a substantial increase from $27.5 million to $63.6 million, driven by improving pulp markets and reduced costs. Despite the positive aspects of the report, the earnings miss prompted a negative response from investors, as reflected in the stock’s downward movement.

Mercer’s Chief Executive Officer, Mr. Juan Carlos Bueno, commented on the quarter’s performance, highlighting the influence of improved pulp and lumber pricing, as well as lower production costs, on the company’s results. “In the first quarter, our operating results were positively impacted by an improved pulp and lumber pricing environment, lower fiber and other production costs, and no planned maintenance downtime,” Bueno stated.

The company’s first-quarter revenue marked a 6% increase from the $522.7 million reported in the same period last year. This growth was primarily attributed to higher pulp sales volumes, which offset lower pulp sales realizations.

Mercer’s pulp segment operating income rose by approximately 36% to $17.4 million from the same quarter last year, mainly due to lower per unit fiber and other production costs, higher sales volumes, and lower freight costs. These positive factors were partially offset by lower sales realizations and a non-cash loss on the disposal of the CPP joint venture investment.

Looking ahead, Mercer anticipates pulp pricing to continue improving in the second quarter of 2024, led by Europe and North America, due to stronger demand and global supply constraints. However, the company expects lumber prices to remain generally flat in the second quarter as demand continues to be affected by high interest rates and economic uncertainty.

The company’s liquidity remains strong, with cash and cash equivalents of $274.3 million and approximately $280.6 million available under its revolving credit facilities, totaling about $554.9 million in aggregate liquidity.

Mercer International Inc. is a global forest products company with a diverse product range, including pulp, lumber, and biofuels. The company’s focus on strategic priorities and cost management has positioned it to navigate through the business cycle effectively.

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