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Mercer International Inc (MERC)
NASDAQ:MERC
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Mercer International
(NASDAQ:MERC)
47Neutral
Mercer International (MERC) vs. S&P 500 (SPY)
Market Cap
$440.68M
Dividend Yield4.55%
Average Volume (3M)388.94K
Price to Earnings (P/E)―
Beta (1Y)1.23
Revenue Growth2.48%
EPS Growth65.00%
CountryUS
Employees3,580
SectorBasic Materials
Sector Strength57
IndustryPaper, Lumber & Forest Products
Share Statistics
EPS (TTM)-1.27
Shares Outstanding66,870,770
10 Day Avg. Volume331,249
30 Day Avg. Volume388,943
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.21
Price to Cash Flow (P/CF)1.50
P/FCF Ratio0.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$7.00Price Target Upside5.11% Upside
Rating ConsensusHold
Number of Analyst Covering3
Mercer International Business Overview & Revenue Model
Company DescriptionMercer International Inc. (MERC) is a leading global producer of market pulp and a significant player in the wood products industry. The company operates in the pulp and paper sector, focusing on the production and sale of northern bleached softwood kraft (NBSK) pulp, which is used in the manufacturing of a diverse range of paper products. Additionally, Mercer International is involved in the production of lumber and other wood products, catering to various industrial and commercial applications. Headquartered in Vancouver, Canada, Mercer International serves a broad international customer base across multiple continents.
How the Company Makes MoneyMercer International generates revenue primarily through the sale of its pulp and wood products. The company's key revenue streams include the production and distribution of NBSK pulp, which is heavily utilized in the paper industry for making tissue, printing and writing papers, and specialty papers. Furthermore, Mercer International produces lumber and other wood products, which contribute to its earnings by serving the construction and industrial markets. The company benefits from strategic partnerships and long-term contracts with major pulp and paper manufacturers globally, which provide stable and recurring revenue. Additionally, Mercer International leverages its operational efficiencies and technological advancements in its production processes to maintain competitive pricing and enhance profitability.
Mercer International Financial Statement Overview
Summary
Mercer International faces challenges in profitability and leverage, with a mixed performance in cash flow management. Despite recent improvements in gross profit and free cash flow, the company must address its high debt levels and strive for consistent revenue and net income growth to enhance financial stability.Income Statement
Mercer International has shown a volatile revenue trend with a recent decline in revenue growth. The gross profit margin significantly improved from negative to positive in 2024, but net income remains negative, indicating challenges in achieving profitability. The EBIT and EBITDA margins are low, further highlighting operational inefficiencies.45
Neutral
Balance Sheet
The company's debt-to-equity ratio is high, suggesting potential leverage risks. However, the equity ratio has stabilized, reflecting a balanced asset structure. Return on equity is negative due to net losses, indicating underperformance in generating shareholder returns.50
Neutral
Cash Flow
Free cash flow turned positive in 2024 after a negative period in 2023, indicating improved cash generation. Operating cash flow is also positive, aiding liquidity, but the ratio of operating cash flow to net income is skewed due to net losses, suggesting room for improvement in converting earnings into cash.55
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.15B | 2.04B | 1.99B | 2.28B | 1.80B | 1.42B | Gross Profit |
| 564.07M | 189.36M | -31.86M | 498.20M | 425.52M | 130.60M | EBIT |
| 480.10M | 15.01M | -188.77M | 392.37M | 346.58M | 63.73M | EBITDA |
| 635.28M | 15.01M | -9.07M | 560.96M | 478.78M | 192.65M | Net Income Common Stockholders |
| 303.91M | -85.14M | -242.06M | 247.04M | 170.99M | -17.23M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 184.93M | 184.93M | 313.99M | 354.03M | 345.61M | 361.10M | Total Assets |
| 2.26B | 2.26B | 2.66B | 2.73B | 2.35B | 2.13B | Total Debt |
| 1.48B | 1.48B | 1.63B | 1.36B | 1.24B | 1.20B | Net Debt |
| 1.29B | 1.29B | 1.31B | 1.00B | 898.51M | 835.46M | Total Liabilities |
| 1.83B | 1.83B | 2.03B | 1.89B | 1.66B | 1.53B | Stockholders Equity |
| 429.77M | 429.77M | 635.41M | 838.78M | 694.02M | 601.03M |
| Cash Flow | Free Cash Flow | ||||
| 141.49M | 5.89M | -205.33M | 181.42M | 21.39M | -37.60M | Operating Cash Flow |
| 294.13M | 90.20M | -69.00M | 360.66M | 182.21M | 41.56M | Investing Cash Flow |
| -266.81M | -66.99M | -199.87M | -425.68M | -187.13M | -59.83M | Financing Cash Flow |
| 12.44M | -152.78M | 228.62M | 81.97M | -9.50M | 26.32M |
Mercer International Technical Analysis
Neutral
6.66
Price Trends
6.78
Negative
6.58
Positive
6.80
Negative
Market Momentum
-0.12
Positive
47.56
Neutral
71.71
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MERC, the sentiment is Neutral. The current price of 6.66 is below the 20-day moving average (MA) of 6.93, below the 50-day MA of 6.78, and below the 200-day MA of 6.80, indicating a bearish trend. The MACD of -0.12 indicates Positive momentum. The RSI at 47.56 is Neutral, neither overbought nor oversold. The STOCH value of 71.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MERC.
Mercer International Risk Analysis
Mercer International disclosed 36 risk factors in its most recent earnings report. Mercer International reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Mercer International Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $3.49B | 164.02 | 1.04% | 3.98% | 3.71% | -64.41% | |
64 Neutral | $6.63B | 16.08 | 26.08% | 1.11% | 13.95% | 138.97% | |
62 Neutral | $21.19B | 54.42 | 3.97% | 2.71% | -7.17% | -52.62% | |
61 Neutral | $8.72B | ― | -0.07% | 1.66% | -2.95% | 94.75% | |
58 Neutral | $402.60M | 33.74 | -5.11% | ― | -10.55% | -203.13% | |
47 Neutral | $2.73B | -3.64 | -22.63% | 3.27% | 3.42% | -27.42% | |
47 Neutral | $440.68M | ― | -15.99% | 4.55% | 2.48% | 65.00% |
* Basic Materials Sector Average
Performance Comparison
MERC
Mercer International
6.66
-3.14
-32.04%
CLW
Clearwater Paper
25.68
-18.26
-41.56%
LPX
Louisiana-Pacific
95.16
12.46
15.07%
PCH
PotlatchDeltic
44.27
-0.80
-1.78%
WY
Weyerhaeuser
29.20
-5.79
-16.55%
TSE:WFG
West Fraser Timber Co
111.43
-4.59
-3.96%
Mercer International Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: 1.22% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. The company reported significant EBITDA growth and successful debt refinancing as key highlights. However, challenges in the solid wood segment, weak hardwood pulp market, and potential impacts of tariffs were notable lowlights. While there are positive indicators, such as strong softwood pulp performance and a positive impact from foreign exchange, the concerns about tariffs and economic conditions in Europe weigh heavily.Highlights
Significant EBITDA Increase for Fiscal Year 2024
EBITDA increased significantly to $244 million in 2024 from $17 million in 2023, driven by stronger pulp markets and cost reduction initiatives.
Successful Debt Refinancing
Successfully redeemed $300 million of 2026 senior notes with proceeds from $200 million of 2028 senior notes and $100 million of cash on hand.
Strong Performance in Softwood Pulp Market
Softwood pulp markets remained strong with a 29,000 tons increase in sales volume and stable pricing outlook for 2025.
Positive Impact of Strong US Dollar
Foreign exchange positively impacted operating income in Q4 by about $26 million compared to Q3.
Electricity Sales Volume Increase
Consolidated electricity sales volume totaled 241 gigawatt hours in Q4, a 36 gigawatt hours increase from Q3.
Lowlights
Negative EBITDA in Solid Wood Segment
Solid wood segment had a quarterly EBITDA of negative $5 million, affected by the weak European economy and high-interest rates impacting the construction industry.
Weak Hardwood Pulp Market
Weak hardwood pulp market led to a $5 million non-cash impairment at the Peace River Mill in Q4.
Decreased Lumber Production
Lumber production in Q4 was down 6% from Q3 due to planned downtime over the winter holidays.
Liquidity Position Decrease
Liquidity position decreased by $66 million from Q3, totaling $489 million at the end of Q4.
Potential Impact of Tariffs
Ongoing uncertainty regarding tariffs, which could impact costs and market dynamics, particularly concerning Canadian sawmilling industry and US trade policies.
Company Guidance
The guidance provided in Mercer International's fourth-quarter 2024 earnings call included several key metrics and strategic insights. Operating EBITDA for Q4 was reported at $99 million, a significant increase from Q3's $50 million, driven by factors like no planned maintenance downtime and a strong US dollar, despite lower pulp pricing. The fiscal year 2024 saw EBITDA rise sharply to $244 million from $17 million in 2023, attributed to stronger pulp markets and cost-reduction measures. The pulp segment contributed $106 million to Q4 EBITDA, while the solid wood segment posted a negative $5 million. MBSK pulp sales volumes increased by 29,000 tons to 405,000 tons in Q4, with production rising by 51,000 tons to 467,000 tons. The North American MBSK list price averaged $1,687 per ton, while European prices averaged $1,500 per ton, both down about $75 from Q3. Consolidated net income for Q4 was $17 million, translating to $0.25 per share. Looking forward, Mercer anticipates capital spending between $100 and $120 million in 2025, with planned maintenance shutdowns across all pulp mills totaling seventy-eight days, a significant increase from 2024's fifty-seven days. Additionally, the board approved a quarterly dividend of $0.075 per share, highlighting a strategic focus on leverage reduction through cost management and capital optimization.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.