Mercer International Inc. Reports Second Quarter and First Half 2020 Results and Announces Quarterly Cash Dividend of $0.065
Selected Highlights
Second quarter net loss of $8.4 million
Quarterly Operating EBITDA* of $40.5 million
Cash on hand and available credit facilities provide liquidity of about $566.8 million at June 30, 2020
NEW YORK, July 30, 2020 (GLOBE NEWSWIRE) -- Mercer International Inc. (Nasdaq: MERC) today reported second quarter 2020 Operating EBITDA decreased to $40.5 million from $70.0 million in the second quarter of 2019 and from $57.0 million in the first quarter of 2020.
In the second quarter of 2020, net loss was $8.4 million (or $0.13 per share) compared to net income of $10.3 million (or $0.16 per share) in the second quarter of 2019 and a net loss of $3.4 million (or $0.05 per share) in the first quarter of 2020.
In the first half of 2020, Operating EBITDA decreased by 50% to $97.5 million from $193.8 million in the same period of 2019. In the first half of 2020, net loss was $11.8 million compared to net income of $61.9 million in the same period of 2019.
Mr. David Gandossi, the Chief Executive Officer, stated: “While the world continues to be impacted by the COVID-19 pandemic, I am proud to say that our people have remained resilient and we implemented measures and procedures to meet the challenges of operating our business safely and efficiently. We are constantly monitoring our operations and guidance from governmental and health organizations to ensure that we continue to take appropriate and necessary actions to protect our people.
All of our mills ran well this quarter. Pulp production was down slightly in the quarter primarily due to a previously announced short-term planned curtailment.
Our Q2 results reflect strong cost control and steady production. On average, pulp pricing was modestly up compared to Q1. However, late in the current quarter, overall pulp demand was modestly weaker as continued strong tissue demand was more than offset by weaker demand from printing and writing customers. Our wood products segment had another strong quarter. Our Friesau mill ran well with strong demand in our U.S. market creating upward pricing pressure late in the quarter. In the current quarter approximately 38% of our lumber sales volumes were to the U.S. which was our single largest market.
As we move into Q3 we will remain focused on controlling our costs, managing our working capital and conservatively managing our strong liquidity position.”
____________
*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 income (loss) to Operating EBITDA.
Consolidated Financial Results
Q2 | Q1 | Q2 | YTD | YTD | |||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
Revenues | $ | 341,195 | $ | 350,599 | $ | 425,753 | $ | 691,794 | $ | 909,703 | |||||||||
Operating income | $ | 10,315 | $ | 24,062 | $ | 37,810 | $ | 34,377 | $ | 131,362 | |||||||||
Operating EBITDA | $ | 40,516 | $ | 57,008 | $ | 69,958 | $ | 97,524 | $ | 193,757 | |||||||||
Net income (loss) | $ | (8,411 | ) | $ | (3,392 | ) | $ | 10,259 | $ | (11,803 | ) | $ | 61,875 | ||||||
Net income (loss) per common share | |||||||||||||||||||
Basic and diluted | $ | (0.13 | ) | $ | (0.05 | ) | $ | 0.16 | $ | (0.18 | ) | $ | 0.94 | ||||||
Consolidated – Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
Total revenues for the three months ended June 30, 2020 decreased by approximately 20% to $341.2 million from $425.8 million in the same quarter of 2019 primarily due to lower pulp sales realizations and pulp sales volumes.
Costs and expenses in the current quarter decreased by approximately 15% to $330.9 million from $387.9 million in the second quarter of 2019 primarily due to lower per unit fiber costs and lower pulp sales volumes and the positive impact of a stronger dollar on our Canadian dollar and euro denominated costs and expenses.
In the second quarter of 2020, Operating EBITDA decreased by approximately 42% to $40.5 million from $70.0 million in the same quarter of 2019 primarily due to lower pulp sales realizations partially offset by lower per unit fiber costs and the positive impact of a stronger dollar.
Segment Results
Pulp: Lower fiber costs more than offset by lower sales realizations
Three Months Ended June 30, | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Pulp revenues | $ | 276,919 | $ | 359,205 | |||
Energy and chemical revenues | $ | 21,127 | $ | 25,594 | |||
Operating income | $ | 8,110 | $ | 42,251 | |||
In the second quarter of 2020, pulp segment operating income decreased to $8.1 million from $42.3 million in the same quarter of 2019. The decrease was primarily due to lower pulp sales realizations partially offset by the positive impact of lower per unit fiber costs and a stronger dollar. In the current quarter of 2020, NBSK pulp sales realizations decreased by approximately 18% to $573 per ADMT from $699 per ADMT in the same quarter of the prior year due to high producer inventory levels. NBSK sales volumes decreased by approximately 4% to 422,586 ADMTs in the current quarter from 438,520 ADMTs in the same quarter of 2019 due to lower production.
Our Canadian pulp mills recorded a non-cash write down of our inventory carrying values of $12.3 million in the current quarter as a result of lower pulp sales realizations and high fiber costs.
Per unit fiber costs decreased in the current quarter by approximately 16% from the same quarter of 2019 due to lower per unit fiber costs for all of our mills. In Germany, per unit fiber costs benefitted from the continuing availability of beetle damaged wood. Per unit fiber costs in Canada declined but remained at historically high levels due to strong fiber demand in the mills' fiber procurement areas.
Wood Products: Continued strong production and lower fiber costs
Three Months Ended June 30, | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Lumber revenues | $ | 37,611 | $ | 35,322 | |||
Energy revenues | $ | 2,629 | $ | 2,788 | |||
Wood residual revenues | $ | 1,487 | $ | 1,342 | |||
Operating income (loss) | $ | 4,327 | $ | (89 | ) | ||
In the second quarter of 2020 the wood products segment operating income increased to $4.3 million compared to an operating loss of $0.1 million in the same quarter of 2019. The increase was primarily due to strong production and lower per unit fiber costs. Production increased by approximately 13% to 113.5 MMfbm of lumber in the current quarter from 100.8 MMfbm in the same quarter of 2019 primarily due to capital improvements at the mill. In the current quarter per unit fiber costs decreased by approximately 26% from the same quarter of 2019 primarily as a result of the continuing availability of beetle damaged wood.
Average lumber sales realizations were generally flat at approximately $345 per Mfbm in the second quarter of 2020 compared to approximately $348 per Mfbm in the same quarter of 2019 as higher pricing in the U.S. market was offset by lower pricing in Europe. U.S. lumber pricing increased due to stronger demand in the current quarter. European lumber pricing declined due to an increase in the supply of lumber processed from beetle damaged wood which generally obtains lower prices.
Consolidated – Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
Total revenues for the first half of 2020 decreased by approximately 24% to $691.8 million from $909.7 million in the first half of 2019 primarily due to lower pulp sales realizations and pulp sales volumes.
Costs and expenses in the first half of 2020 decreased by approximately 16% to $657.4 million from $778.3 million in the first half of 2019 primarily due to lower per unit fiber costs, lower pulp sales volumes and the positive impact of a stronger dollar on our Canadian dollar and euro denominated costs and expenses.
For the first half of 2020, our net loss was $11.8 million, or $0.18 per share compared to net income of $61.9 million, or $0.94 per share, in the same period of 2019.
In the first half of 2020, Operating EBITDA decreased by approximately 50% to $97.5 million from $193.8 million in the same period of 2019 primarily due to lower pulp sales realizations and pulp sales volumes partially offset by lower per unit fiber costs and the positive impact of a stronger dollar versus the Canadian dollar and euro.
Liquidity
The following table is a summary of selected financial information as of the dates indicated:
June 30, | December 31, | ||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Cash and cash equivalents | $ | 303,334 | $ | 351,085 | |||
Working capital | $ | 586,682 | $ | 588,385 | |||
Total assets | $ | 1,973,609 | $ | 2,065,720 | |||
Long-term liabilities | $ | 1,282,395 | $ | 1,259,005 | |||
Total equity | $ | 494,260 | $ | 550,403 | |||
As of June 30, 2020, we had cash and cash equivalents of approximately $303.3 million, approximately $263.5 million available under our revolving credit facilities, providing aggregate liquidity of about $566.8 million.
In June 2020, we amended our revolving credit facility for our Celgar mill to increase the principal amount available to C$60 million from C$40 million with all other terms remaining substantially unchanged.
Current Market Environment
Commencing around the end of the second quarter, many countries have taken measures to ease restrictions on economic and social activities to, among other things, reopen their economies by allowing businesses to restart and encourage economic activity. The results of such economic measures and reopening have varied from country to country.
While such measures are encouraging, currently we are unable to predict the outcome or pace of such economic reopening, the strength or timing of any recovery or whether they will result in such a material resurgence of the virus that causes governments to re-impose restrictive measures.
As a result of the continuing global economic impact and uncertainty resulting from the COVID-19 pandemic and the seasonal third quarter pulp market slowdown, we are expecting an overall weakening in pulp demand in the upcoming quarter with some modest price improvements towards the end of the quarter.
On the pulp supply side, to date various pulp mills globally have delayed their annual maintenance schedules as a result of the current pandemic. As a result, we currently expect mills to curtail production to implement such delayed maintenance in the later part of this year or the early part of next year. As previously announced, in July our Celgar mill is taking a 30-day market related curtailment.
We currently expect strong lumber demand and higher lumber sales realizations in the U.S. market and steady demand and sales realizations in the European lumber market in the upcoming quarter.
Quarterly Dividend
A quarterly dividend of $0.065 per share will be paid on October 6, 2020 to all shareholders of record on September 29, 2020. Future dividends will be subject to Board approval and may be adjusted as business and industry conditions warrant.
Earnings 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 July 31, 2020 at 10:00 AM (Eastern Daylight Time). Listeners can access the conference call live and archived for 30 days over the Internet at https://edge.media-server.com/mmc/p/cmgyreto 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 site and download and install any necessary audio software.
Mercer International Inc. is a global forest products company with operations in Germany and Canada with consolidated annual production capacity of 2.2 million tonnes of pulp and 550 million board feet of lumber. To obtain further information on the company, please visit its web site 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", "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, 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:
Jimmy S.H. Lee
Executive Chairman
(604) 684-1099
David M. Gandossi, FCPA, FCA
Chief Executive Officer
(604) 684-1099
-FINANCIAL TABLES FOLLOW-
Summary Financial Highlights
Q2 | Q1 | Q2 | YTD | YTD | |||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
Pulp segment revenues | $ | 298,046 | $ | 303,605 | $ | 384,799 | $ | 601,651 | $ | 821,273 | |||||||||
Wood products segment revenues | 41,727 | 45,778 | 39,452 | 87,505 | 83,891 | ||||||||||||||
Corporate and other revenues | 1,422 | 1,216 | 1,502 | 2,638 | 4,539 | ||||||||||||||
Total revenues | $ | 341,195 | $ | 350,599 | $ | 425,753 | $ | 691,794 | $ | 909,703 | |||||||||
Pulp segment operating income | $ | 8,110 | $ | 21,439 | $ | 42,251 | $ | 29,549 | $ | 135,771 | |||||||||
Wood products segment operating income (loss) | 4,327 | 5,555 | (89 | ) | 9,882 | 1,531 | |||||||||||||
Corporate and other operating loss | (2,122 | ) | (2,932 | ) | (4,352 | ) | (5,054 | ) | (5,940 | ) | |||||||||
Total operating income | $ | 10,315 | $ | 24,062 | $ | 37,810 | $ | 34,377 | $ | 131,362 | |||||||||
Pulp segment depreciation and amortization | $ | 27,219 | $ | 30,371 | $ | 29,849 | $ | 57,590 | $ | 57,872 | |||||||||
Wood products segment depreciation and amortization | 2,804 | 2,377 | 2,010 | 5,181 | 3,921 | ||||||||||||||
Corporate and other depreciation and amortization | 178 | 198 | 289 | 376 | 602 | ||||||||||||||
Total depreciation and amortization | $ | 30,201 | $ | 32,946 | $ | 32,148 | $ | 63,147 | $ | 62,395 | |||||||||
Operating EBITDA | $ | 40,516 | $ | 57,008 | $ | 69,958 | $ | 97,524 | $ | 193,757 | |||||||||
Provision for income taxes | $ | (882 | ) | $ | (5,344 | ) | $ | (10,433 | ) | $ | (6,226 | ) | $ | (34,857 | ) | ||||
Net income (loss) | $ | (8,411 | ) | $ | (3,392 | ) | $ | 10,259 | $ | (11,803 | ) | $ | 61,875 | ||||||
Net income (loss) per common share | |||||||||||||||||||
Basic and diluted | $ | (0.13 | ) | $ | (0.05 | ) | $ | 0.16 | $ | (0.18 | ) | $ | 0.94 | ||||||
Common shares outstanding at period end | 65,868 | 65,800 | 65,629 | 65,868 | 65,629 | ||||||||||||||
Summary Operating Highlights
Q2 | Q1 | Q2 | YTD | YTD | |||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Pulp Segment | |||||||||||||||||||
Pulp production ('000 ADMTs) | |||||||||||||||||||
NBSK | 423.8 | 455.2 | 452.8 | 879.0 | 913.4 | ||||||||||||||
NBHK | 88.8 | 78.9 | 89.4 | 167.8 | 168.0 | ||||||||||||||
Annual maintenance downtime ('000 ADMTs) | 11.3 | 2.3 | 7.5 | 13.6 | 7.5 | ||||||||||||||
Annual maintenance downtime (days) | 15 | 2 | 15 | 17 | 15 | ||||||||||||||
Pulp sales ('000 ADMTs) | |||||||||||||||||||
NBSK | 422.6 | 438.3 | 438.5 | 860.9 | 905.4 | ||||||||||||||
NBHK | 69.3 | 66.0 | 81.5 | 135.4 | 169.4 | ||||||||||||||
Average NBSK pulp prices ($/ADMT)(1) | |||||||||||||||||||
Europe | 850 | 833 | 997 | 842 | 1,051 | ||||||||||||||
China | 572 | 573 | 630 | 573 | 665 | ||||||||||||||
North America | 1,158 | 1,127 | 1,292 | 1,143 | 1,336 | ||||||||||||||
Average NBHK pulp prices ($/ADMT)(1) | |||||||||||||||||||
China | 465 | 460 | 607 | 463 | 651 | ||||||||||||||
North America | 897 | 890 | 1,100 | 893 | 1,140 | ||||||||||||||
Average pulp sales realizations ($/ADMT)(2) | |||||||||||||||||||
NBSK | 573 | 561 | 699 | 567 | 729 | ||||||||||||||
NBHK | 475 | 468 | 618 | 472 | 638 | ||||||||||||||
Energy production ('000 MWh)(3) | 562.9 | 578.4 | 575.4 | 1,141.3 | 1,135.8 | ||||||||||||||
Energy sales ('000 MWh)(3) | 222.0 | 231.7 | 231.9 | 453.7 | 443.7 | ||||||||||||||
Average energy sales realizations ($/MWh)(3) | 85 | 95 | 93 | 90 | 94 | ||||||||||||||
Wood Products Segment | |||||||||||||||||||
Lumber production (MMfbm) | 113.5 | 116.4 | 100.8 | 229.8 | 211.5 | ||||||||||||||
Lumber sales (MMfbm) | 109.0 | 117.7 | 101.5 | 226.7 | 210.7 | ||||||||||||||
Average lumber sales realizations ($/Mfbm) | 345 | 348 | 348 | 347 | 354 | ||||||||||||||
Energy production and sales ('000 MWh) | 22.7 | 22.8 | 24.1 | 45.4 | 46.4 | ||||||||||||||
Average energy sales realizations ($/MWh) | 116 | 116 | 116 | 116 | 118 | ||||||||||||||
Average Spot Currency Exchange Rates | |||||||||||||||||||
$ / €(4) | 1.1016 | 1.1022 | 1.1237 | 1.1019 | 1.1293 | ||||||||||||||
$ / C$(4) | 0.7221 | 0.7438 | 0.7475 | 0.7328 | 0.7497 | ||||||||||||||
______________
(1) | Source: RISI pricing report. Europe and North America are list prices. China are net prices which include discounts, allowances and rebates. Effective January 2020, the RISI pricing report does not provide list prices for China. | |
(2) | Sales realizations after customer discounts, rebates and other selling concessions. Incorporates the effect of pulp price variations occurring between the order and shipment dates. | |
(3) | Does not include our 50% joint venture interest in the Cariboo mill, which is accounted for using the equity method. | |
(4) | Average Federal Reserve Bank of New York Noon Buying Rates over the reporting period. |
MERCER INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended | Six Months Ended | |||||||||||||||
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 | ||||||||
MERCER INTERNATIONAL INC.
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, 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 | ||||
MERCER INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended | Six Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Cash flows from (used in) operating activities | ||||||||||||||||
Net income (loss) | $ | (8,411 | ) | $ | 10,259 | $ | (11,803 | ) | $ | 61,875 | ||||||
Adjustments to reconcile net income (loss) to cash flows from operating activities | ||||||||||||||||
Depreciation and amortization | 30,201 | 32,148 | 63,147 | 62,395 | ||||||||||||
Deferred income tax provision (benefit) | (4,744 | ) | 426 | (6,075 | ) | 4,065 | ||||||||||
Inventory impairment | 6,530 | 6,900 | 12,264 | 6,900 | ||||||||||||
Defined benefit pension plans and other post-retirement benefit plan expense | 739 | 860 | 1,501 | 1,716 | ||||||||||||
Stock compensation expense (recovery) | (34 | ) | 1,202 | (80 | ) | 857 | ||||||||||
Foreign exchange transaction losses | 6,880 | 9,505 | 736 | 9,242 | ||||||||||||
Other | (695 | ) | 740 | (1,192 | ) | 1,444 | ||||||||||
Defined benefit pension plans and other post-retirement benefit plan contributions | (797 | ) | (270 | ) | (1,712 | ) | (1,428 | ) | ||||||||
Changes in working capital | ||||||||||||||||
Accounts receivable | 14,938 | 32,204 | (5,988 | ) | (24,149 | ) | ||||||||||
Inventories | 11,442 | (7,769 | ) | (6,678 | ) | 13,372 | ||||||||||
Accounts payable and accrued expenses | 7,879 | 4,197 | (49,781 | ) | 4,024 | |||||||||||
Other | 177 | (1,681 | ) | (76 | ) | (9,406 | ) | |||||||||
Net cash from (used in) operating activities | 64,105 | 88,721 | (5,737 | ) | 130,907 | |||||||||||
Cash flows from (used in) investing activities | ||||||||||||||||
Purchase of property, plant and equipment | (21,544 | ) | (24,979 | ) | (44,562 | ) | (44,368 | ) | ||||||||
Purchase of amortizable intangible assets | (89 | ) | (179 | ) | (527 | ) | (495 | ) | ||||||||
Other | 796 | (82 | ) | 847 | (343 | ) | ||||||||||
Net cash from (used in) investing activities | (20,837 | ) | (25,240 | ) | (44,242 | ) | (45,206 | ) | ||||||||
Cash flows from (used in) financing activities | ||||||||||||||||
Proceeds from (repayment of) revolving credit facilities, net | (25,651 | ) | (24,732 | ) | 25,609 | (58,404 | ) | |||||||||
Dividend payments | — | (8,206 | ) | (9,047 | ) | (8,206 | ) | |||||||||
Repurchase of common shares | — | (754 | ) | (162 | ) | (754 | ) | |||||||||
Payment of debt issuance costs | — | (248 | ) | — | (757 | ) | ||||||||||
Proceeds from government grants | 299 | — | 299 | 6,320 | ||||||||||||
Other | (1,996 | ) | (6,067 | ) | (11,797 | ) | (6,929 | ) | ||||||||
Net cash from (used in) financing activities | (27,348 | ) | (40,007 | ) | 4,902 | (68,730 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 888 | 614 | (2,674 | ) | (140 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 16,808 | 24,088 | (47,751 | ) | 16,831 | |||||||||||
Cash and cash equivalents, beginning of period | 286,526 | 233,234 | 351,085 | 240,491 | ||||||||||||
Cash and cash equivalents, end of period | $ | 303,334 | $ | 257,322 | $ | 303,334 | $ | 257,322 | ||||||||
MERCER INTERNATIONAL INC.
COMPUTATION OF OPERATING EBITDA
(Unaudited)
(In thousands)
Operating EBITDA is defined as operating income plus depreciation and amortization and non-recurring capital 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 as a performance measure primarily because depreciation expense and non-recurring capital asset impairment charges are not an actual cash cost, 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, we believe 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 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 as a measure of performance, nor as an alternative to net cash from (used in) operating activities as a measure of liquidity. The following tables set forth the net income (loss) to Operating EBITDA:
Q2 | Q1 | Q2 | YTD | YTD | |||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Net income (loss) | $ | (8,411 | ) | $ | (3,392 | ) | $ | 10,259 | $ | (11,803 | ) | $ | 61,875 | ||||||
Provision for income taxes | 882 | 5,344 | 10,433 | 6,226 | 34,857 | ||||||||||||||
Interest expense | 20,108 | 20,084 | 18,369 | 40,192 | 36,920 | ||||||||||||||
Other (income) expenses | (2,264 | ) | 2,026 | (1,251 | ) | (238 | ) | (2,290 | ) | ||||||||||
Operating income | 10,315 | 24,062 | 37,810 | 34,377 | 131,362 | ||||||||||||||
Add: Depreciation and amortization | 30,201 | 32,946 | 32,148 | 63,147 | 62,395 | ||||||||||||||
Operating EBITDA | $ | 40,516 | $ | 57,008 | $ | 69,958 | $ | 97,524 | $ | 193,757 | |||||||||
