Mercer International (MERC) Q1 2025 earnings summary

Executive summary

• Q1 2025 Operating EBITDA was $47.1M, down from $99M in Q4 2024 and $63.6M in Q1 2024, mainly due to 22 days of planned maintenance at Celgar Mill and higher fiber costs, resulting in a net loss of $22.3M ($0.33/share) versus net income of $17M in Q4.

• Pulp segment EBITDA was $49.9M, with sales volumes and production down due to maintenance; solid wood segment EBITDA was near break-even, with higher lumber revenues offset by increased fiber costs.

• Cost reduction and efficiency initiatives targeting $100M in savings by end of 2026 are ongoing, with $20M inventory and $20M capex reductions targeted for 2025.

• Liquidity at quarter-end was $470.7M, including $181.5M cash and $289M undrawn revolvers.

• Quarterly dividend of $0.075/share declared.

Financial highlights

• Q1 2025 revenues declined 8% year-over-year to $507.0M, mainly due to lower pulp sales volumes, partially offset by higher pulp and lumber sales realizations.

• Operating EBITDA fell 26% year-over-year to $47.1M; net loss widened to $22.3M from $16.7M in Q1 2024.

• Cash and cash equivalents at March 31, 2025 were $181.5M; working capital was $671.4M, and total shareholders’ equity $437.4M.

• Net cash used in operating activities was $3M in Q1 2025; capex was $20.1M.

• Dividend of $0.075/share declared and paid.

Outlook and guidance

• Pulp prices expected to remain strong in Europe and North America in Q2 2025, with lower prices anticipated in China; lumber prices projected to decrease in the U.S. and slightly increase in Europe.

• Higher per unit fiber costs expected for German pulp and solid wood segments in Q2 2025; Canadian pulp mills’ costs should remain stable.

• Mass timber segment expects a weaker Q2 and Q3, with improvement in Q4 and ramp-up to two shifts in early 2026.

• Planned 79 days of maintenance downtime in 2025, up from 57 in 2024.

• 2025 CapEx reduced to $90M–$100M, focused on maintenance, environmental, and safety projects.