Mercer(MERC)2024-08-09 20:05Financial Data and Key Metrics Changes - In Q2 2024, the company's EBITDA totaled 64 million in Q1 2024, primarily due to 37 days of planned maintenance downtime which adversely impacted EBITDA by approximately 68 million for Q2 2024, compared to a net loss of 11 million, down from approximately 32 million, while the Solid Wood segment contributed 811 per tonne in China, 1,697 per tonne in North America, reflecting increases of 202, and 120 million for 2024, including projects at Torgau and Spokane [11][19] - The company aims to expand its mass timber capacity and expects to see significant shareholder value from this investment, with a projected increase in timber capacity by 25% upon project completion [23][24] - The company is committed to its 2030 carbon reduction targets and believes its products will play a significant role in reducing carbon emissions [21] Management's Comments on Operating Environment and Future Outlook - Management noted that the pulp markets improved significantly in Q2, particularly in Europe and North America, driven by increased demand from paper and tissue producers [12] - There is an expectation of modest downward pressure on pulp prices in Q3 due to seasonal demand but potential positive pricing pressure later in the year [13] - The company remains cautious about the economic conditions in Germany, which are expected to lag behind the rest of Europe, impacting demand for construction products [34] Other Important Information - The company recognized a noncash goodwill impairment of 581 million, comprising 317 million in undrawn revolvers [8] Q&A Session Summary Question: Changes in U.S. lumber shipments post-Torgau projects - Management expects a 25% increase in timber capacity post-project completion, with U.S. shipments fluctuating based on market conditions [23][24] Question: Impact of new hybrid pulp products on NBSK - Management does not see significant threat from new hybrid products, emphasizing strong customer relationships and product quality [25][27] Question: Current state of the pulp market and pricing trends - Management noted a correction in hardwood prices but maintained that softwood remains tight in supply, with expectations for softwood prices to stabilize [29][30] Question: Economic recovery signs in Germany - Management indicated that recovery signs in Germany are still timid, with expectations for improvement taking longer than anticipated [33][34] Question: Potential asset divestitures for deleveraging - The only asset currently on the market for sale is Santanol, with no further write-downs expected [37] Question: Order file timing and pricing realization - Management clarified that pulp sales are primarily spot sales, with delivery times varying from one to two weeks [39][40] Question: Mass timber business performance and EBITDA margins - The mass timber segment is currently EBITDA positive, with expectations for significant growth in sales and margins as operations expand [41][42][43]