Mercer International (MERC) investor relations material

Executive summary

• Q1 2026 operating EBITDA improved to $8 million from a $20 million loss in Q4 2025, but was down from $47.1 million in Q1 2025, aided by cost initiatives and reduced downtime.

• Net loss for Q1 2026 was $52 million ($0.78/share), including a $22 million non-cash inventory impairment, narrowing from a $309 million loss in Q4 2025 but widening year-over-year.

• Revenues declined 3% year-over-year to $489.3 million, mainly due to lower pulp sales realizations, partially offset by higher sales in other products.

• Liquidity decreased to $229 million, reflecting a temporary reduction in credit facility availability and higher working capital.

• The "One Goal One Hundred" program delivered $41 million in cost savings to date, targeting $100 million by end of 2026.

Financial highlights

• Operating EBITDA rose to $8 million in Q1 2026, up $28 million sequentially, but down from $47.1 million a year ago.

• Q1 net loss was $52 million, improved from a $309 million loss in Q4, but worse than $22.3 million in Q1 2025.

• Aggregate liquidity at quarter-end was $229 million, with $85 million in cash and $144 million in undrawn revolvers.

• Cash used in operating activities was $85.7 million in Q1 2026.

• Maintenance capital expenditures totaled $13 million in Q1 2026.

Outlook and guidance

• Modest NBSK pulp price improvements are expected in Q2 2026, with NBHK prices to remain flat.

• Lumber prices anticipated to remain stable in Europe and rise modestly in the U.S.; pallet and mass timber prices expected to be flat.

• Per unit fiber costs for both segments expected to stabilize in Q2 2026.

• Cost reduction initiatives and anticipated market improvements are expected to restore covenant compliance by Q4 2026.

• Planned CapEx for 2026 is $60–$80 million, focused on maintenance, environmental, and safety projects.