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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File No.: 000-51826

MERCER INTERNATIONAL INC.

(Exact name of Registrant as specified in its charter)


Washington		47-0956945
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

Suite 1120, 700 West Pender Street, Vancouver, British Columbia, Canada, V6C 1G8

(Address of office)

(604) 684-1099

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common Stock, par value $1.00 per share

     MERC

     NASDAQ Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NO ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ NO ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The Registrant had 66,870,774 shares of common stock outstanding as of April 29, 2025.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

(Unaudited)

FORM 10-Q

QUARTERLY REPORT - PAGE 2

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands of U.S. dollars, except per share data)


	Three Months Ended March 31,
	2025			2024
Revenues	$	506,974		$	553,430
Costs and expenses
Cost of sales, excluding depreciation and amortization		430,247			458,182
Cost of sales depreciation and amortization		40,290			40,350
Selling, general and administrative expenses		29,704			31,701
Loss on disposal of investment in joint venture		—			23,645
Operating income (loss)		6,733			(448	)
Other income (expenses)
Interest expense		(28,155	)		(27,559	)
Other income (expenses)		(185	)		4,939
Total other expenses, net		(28,340	)		(22,620	)
Loss before income taxes		(21,607	)		(23,068	)
Income tax recovery (provision)		(732	)		6,365
Net loss	$	(22,339	)	$	(16,703	)
Net loss per common share
Basic	$	(0.33	)	$	(0.25	)
Diluted	$	(0.33	)	$	(0.25	)
Dividends declared per common share	$	0.075		$	0.075

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands of U.S. dollars)


	Three Months Ended March 31,
	2025			2024
Net loss	$	(22,339	)	$	(16,703	)
Other comprehensive income (loss)
Loss related to defined benefit pension plans		(262	)		(83	)
Income tax provision		—			(90	)
Loss related to defined benefit pension plans, net of tax		(262	)		(173	)
Foreign currency translation adjustments		34,337			(37,469	)
Other comprehensive income (loss), net of tax		34,075			(37,642	)
Total comprehensive income (loss)	$	11,736		$	(54,345	)

See accompanying Notes to the Interim Consolidated Financial Statements.

FORM 10-Q

QUARTERLY REPORT - PAGE 3

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)


	March 31, 2025			December 31, 2024
ASSETS
Current assets
Cash and cash equivalents	$	181,473		$	184,925
Accounts receivable, net		345,839			327,345
Inventories		379,633			361,682
Prepaid expenses and other		43,157			17,601
Assets classified as held for sale		19,685			18,451
Total current assets		969,787			910,004
Property, plant and equipment, net		1,267,568			1,254,715
Amortizable intangible assets, net		49,868			49,829
Operating lease right-of-use assets		6,761			7,598
Pension asset		8,263			9,378
Deferred income tax assets		19,793			17,778
Other long-term assets		14,127			13,630
Total assets	$	2,336,167		$	2,262,932
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and other	$	290,560		$	248,661
Pension and other post-retirement benefit obligations		732			732
Liabilities associated with assets held for sale		7,090			7,145
Total current liabilities		298,382			256,538
Long-term debt		1,503,203			1,473,986
Pension and other post-retirement benefit obligations		11,572			11,134
Operating lease liabilities		4,154			4,793
Deferred income tax liabilities		69,477			74,772
Other long-term liabilities		12,028			11,934
Total liabilities		1,898,816			1,833,157
Shareholders’ equity
Common shares $1 par value; 200,000,000 authorized; 66,871,000 issued and outstanding (2024 – 66,871,000)		66,850			66,850
Additional paid-in capital		363,637			362,782
Retained earnings		203,558			230,912
Accumulated other comprehensive loss		(196,694	)		(230,769	)
Total shareholders’ equity		437,351			429,775
Total liabilities and shareholders’ equity	$	2,336,167		$	2,262,932

Commitments and contingencies (Note 14)
Subsequent event (Note 8)

See accompanying Notes to the Interim Consolidated Financial Statements.

FORM 10-Q

QUARTERLY REPORT - PAGE 4

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)

(In thousands of U.S. dollars)


	Common shares
Three Months Ended March 31:	Number (thousands of shares)		Amount, at Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
Balance as of December 31, 2024		66,871	$	66,850	$	362,782		$	230,912		$	(230,769	)	$	429,775
Stock compensation expense		—		—		855			—			—			855
Net loss		—		—		—			(22,339	)		—			(22,339	)
Dividends declared		—		—		—			(5,015	)		—			(5,015	)
Other comprehensive income		—		—		—			—			34,075			34,075
Balance as of March 31, 2025		66,871	$	66,850	$	363,637		$	203,558		$	(196,694	)	$	437,351

Balance as of December 31, 2023		66,525	$	66,471	$	359,497		$	336,113		$	(126,671	)	$	635,410
Shares issued on grants of performance share units		325		325		(325	)		—			—			—
Stock compensation expense		—		—		1,769			—			—			1,769
Net loss		—		—		—			(16,703	)		—			(16,703	)
Dividends declared		—		—		—			(5,014	)		—			(5,014	)
Disposal of investment in joint venture		—		—		—			—			(4,181	)		(4,181	)
Other comprehensive loss		—		—		—			—			(37,642	)		(37,642	)
Balance as of March 31, 2024		66,850	$	66,796	$	360,941		$	314,396		$	(168,494	)	$	573,639

See accompanying Notes to the Interim Consolidated Financial Statements.

FORM 10-Q

QUARTERLY REPORT - PAGE 5

MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands of U.S. dollars)


	Three Months Ended March 31,
	2025			2024
Cash flows from (used in) operating activities
Net loss	$	(22,339	)	$	(16,703	)
Adjustments to reconcile net loss to cash flows from operating activities
Depreciation and amortization		40,355			40,404
Deferred income tax recovery		(9,506	)		(13,426	)
Loss on disposal of investment in joint venture		—			23,645
Defined benefit pension plans and other post-retirement benefit plan expense		169			210
Stock compensation expense		1,006			2,029
Foreign exchange transaction losses (gains)		8,418			(3,449	)
Other		1,628			727
Defined benefit pension plans and other post-retirement benefit plan contributions		—			(329	)
Changes in working capital
Accounts receivable		(16,798	)		(63,729	)
Inventories		(6,891	)		89
Accounts payable and accrued expenses		28,432			2,390
Prepaid expenses and other		(27,463	)		(1,052	)
Net cash from (used in) operating activities		(2,989	)		(29,194	)
Cash flows from (used in) investing activities
Purchase of property, plant and equipment		(20,082	)		(18,461	)
Other		222			977
Net cash from (used in) investing activities		(19,860	)		(17,484	)
Cash flows from (used in) financing activities
Proceeds from revolving credit facilities, net		21,754			9,125
Payment of finance lease obligations		(2,508	)		(2,189	)
Other		—			(115	)
Net cash from (used in) financing activities		19,246			6,821
Effect of exchange rate changes on cash and cash equivalents		151			137
Net decrease in cash and cash equivalents		(3,452	)		(39,720	)
Cash and cash equivalents, beginning of period		184,925			313,992
Cash and cash equivalents, end of period	$	181,473		$	274,272


Supplemental cash flow disclosure:
Cash paid for interest	$	25,026	$	34,716
Cash paid for income taxes	$	16,912	$	8,173
Supplemental schedule of non-cash investing and financing activities:
Leased production and other equipment	$	1,388	$	4,514

See accompanying Notes to the Interim Consolidated Financial Statements.

FORM 10-Q

QUARTERLY REPORT - PAGE 6

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 1. The Company and Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

The Interim Consolidated Financial Statements contained herein include the accounts of Mercer International Inc. (“Mercer Inc.”) and all of its subsidiaries (collectively the “Company”). Mercer Inc. owns 100% of its subsidiaries. The Company's shares of common stock are quoted and listed for trading on the NASDAQ Global Select Market.

The Interim Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The consolidated balance sheet information as of December 31, 2024 was derived from the Company’s audited Consolidated Financial Statements, but does not contain all of the footnote disclosures from the annual Consolidated Financial Statements. The footnote disclosure included herein has been prepared in accordance with accounting principles generally accepted for interim financial statements in the United States (“GAAP”). The unaudited Interim Consolidated Financial Statements should be read together with the audited Consolidated Financial Statements and accompanying notes included in the Company's latest Annual Report on Form 10‑K for the fiscal year ended December 31, 2024. In the opinion of the Company, the unaudited Interim Consolidated Financial Statements contained herein have been prepared on a consistent basis with the audited Consolidated Financial Statements and accompanying notes included in the Company's latest Annual Report on Form 10‑K for the fiscal year ended December 31, 2024 and contain all adjustments necessary for a fair statement of the results of the interim periods included. The results for the periods included herein may not be indicative of the results for the entire year.

In these Interim Consolidated Financial Statements, unless otherwise indicated, all amounts are expressed in United States dollars (“U.S. dollars” or “$”). The symbol “€” refers to euros and the symbol “C$” refers to Canadian dollars.

Use of Estimates

Preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant management judgment is required in determining the accounting for, among other things, future cash flows associated with impairment testing for goodwill and long-lived assets, depreciation and amortization, pension and other post-retirement benefit obligations, deferred income taxes (valuation allowance and permanent reinvestment), the allocation of the purchase price in a business combination to the assets acquired and liabilities assumed, revenues under long-term contracts, inventory impairment, assets and liabilities classified as held for sale and the fair value of disposal groups, legal liabilities and contingencies. Actual results could differ materially from these estimates and changes in these estimates are recorded when known.

New Accounting Pronouncements

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, which requires additional disaggregation of the reconciliation between the statutory and effective tax rate for an entity and of income taxes paid. The amendments improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company continues to assess the impact of ASU 2023-09.

FORM 10-Q

QUARTERLY REPORT - PAGE 7

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, which expands disclosures about specific expense categories presented on the face of the income statement and addresses requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation and amortization) in commonly presented expense captions (such as cost of sales, selling, general and administrative expenses). ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods thereafter with early adoption permitted. The Company is currently assessing the impact of ASU 2024-03.

Note 2. Assets and Liabilities Classified as Held for Sale

The Company continues to actively market the sandalwood business and expects a sale to occur within the next 12 months. Accordingly, the assets and associated liabilities of the business, referred to as the “disposal group”, continues to be classified as held for sale.

The disposal group’s estimated fair value was determined using Level 3 inputs based on preliminary indicative offers from third parties. The following summarizes the major classes of assets and liabilities classified as held for sale as of March 31, 2025.


	March 31, 2025
Cash and cash equivalents	$	2,344
Accounts receivable, net		2,194
Inventories		19,878
Property, plant and equipment, net		3,204
Operating lease right-of-use-assets		4,930
Sandalwood tree plantations		24,603
Impairment reserve		(40,215	)
Impact of changes in foreign exchange rate		2,747
Assets classified as held for sale	$	19,685

Accounts payable and other	$	2,281
Operating lease liabilities		4,809
Liabilities associated with assets held for sale	$	7,090

Note 3. Inventories

Inventories as of March 31, 2025 and December 31, 2024, were comprised of the following:


	March 31, 2025		December 31, 2024
Raw materials	$	152,747	$	131,396
Finished goods		93,812		101,121
Spare parts and other		133,074		129,165
	$	379,633	$	361,682

FORM 10-Q

QUARTERLY REPORT - PAGE 8

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 4. Accounts Payable and Other

Accounts payable and other as of March 31, 2025 and December 31, 2024, was comprised of the following:


	March 31,		December 31,
	2025		2024
Trade payables	$	70,527	$	53,610
Accrued expenses		96,893		73,755
Interest payable		34,879		33,312
Income tax payable		24,521		30,459
Payroll-related accruals		25,092		24,100
Wastewater fee (a)		7,115		6,324
Finance lease liability		10,011		9,415
Operating lease liability		2,674		2,874
Other		18,848		14,812
	$	290,560	$	248,661

(a)

The Company is required to pay certain fees based on wastewater emissions at its German mills. Accrued fees can be reduced upon the mills’ demonstration of reduced wastewater emissions.

Note 5. Debt

Debt as of March 31, 2025 and December 31, 2024, was comprised of the following:


	Maturity	March 31, 2025			December 31, 2024
Senior notes (a)
12.875% senior notes	2028	$	400,000		$	400,000
5.125% senior notes	2029		875,000			875,000

Credit arrangements
€370.1 million German joint revolving credit facility (b)	2027		186,559			168,822
C$160.0 million Canadian joint revolving credit facility (c)	2027		11,478			347
€2.6 million demand loan (d)			—			—

Finance lease liability			48,601			48,214
			1,521,638			1,492,383
Less: unamortized senior note issuance costs			(8,424	)		(8,982	)
Less: finance lease liability due within one year			(10,011	)		(9,415	)
		$	1,503,203		$	1,473,986

The maturities of the principal portion of the senior notes and credit arrangements as of March 31, 2025 were as follows:


	Senior Notes and Credit Arrangements
2026	$	—
2027		198,037
2028		400,000
2029		875,000
	$	1,473,037

FORM 10-Q

QUARTERLY REPORT - PAGE 9

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Certain of the Company's debt instruments were issued under agreements which, among other things, may limit its ability and the ability of its subsidiaries to make certain payments, including dividends. These limitations are subject to specific exceptions. As of March 31, 2025, the Company was in compliance with the terms of its debt agreements.

(a)

The senior notes which mature on October 1, 2028 (the “2028 Senior Notes”) and on February 1, 2029 (the “2029 Senior Notes” and collectively with the 2028 Senior Notes, the “Senior Notes”) are general unsecured senior obligations of the Company. The Company may redeem all or a part of the Senior Notes upon not less than 10 days’ or more than 60 days’ notice at the redemption price plus accrued and unpaid interest to (but not including) the applicable redemption date.

The following table presents the redemption prices (expressed as percentages of principal amount) and the redemption periods of the Senior Notes:


2028 Senior Notes		2029 Senior Notes
12 Month Period Beginning	Percentage	12 Month Period Beginning	Percentage
October 1, 2025	106.438%	February 1, 2025	101.281%
October 1, 2026	103.219%	February 1, 2026 and thereafter	100.000%
October 1, 2027 and thereafter	100.000%

(b)

A €370.1 million joint revolving credit facility for the German mills that matures in September 2027. Borrowings under the facility are unsecured and bear interest at Euribor plus a variable margin ranging from 1.40% to 2.35% dependent on conditions including but not limited to a prescribed leverage ratio. The facility is sustainability linked whereby the interest rate margin is subject to upward or downward adjustments of up to 0.05% per annum if the Company achieves, or fails to achieve, certain specified sustainability targets. As of March 31, 2025, approximately €172.5 million ($186,559) of this facility was drawn and accruing interest at a rate of 4.004%, approximately €14.4 million ($15,520) was supporting bank guarantees and approximately €183.2 million ($198,212) was available.

(c)

A C$160.0 million joint revolving credit facility for the Celgar mill, Peace River mill and certain other Canadian subsidiaries that matures in January 2027. The facility is available by way of: (i) Canadian dollar denominated advances, which bear interest at a designated prime rate per annum; (ii) Canadian dollar denominated advances, which bear interest at the applicable Adjusted Term Canadian Overnight Repo Rate Average (“CORRA”) plus 1.20% to 1.45% per annum; (iii) dollar denominated base rate advances at the greater of the federal funds rate plus 0.50%, an Adjusted Term Secured Overnight Financing Rate (“SOFR”) for a one month tenor plus 1.00% and the bank’s applicable reference rate for dollar denominated loans; and (iv) dollar denominated SOFR advances, which bear interest at the applicable Adjusted Term SOFR plus 1.20% to 1.45% per annum. As of March 31, 2025, approximately C$16.5 million ($11,478) of this facility was drawn and accruing interest at a rate of 4.326%, approximately C$0.6 million ($448) was supporting letters of credit and approximately C$130.9 million ($91,023) was available.

(d)

A €2.6 million demand loan for the Rosenthal mill that does not have a maturity date. Borrowings under this facility are unsecured and bear interest at the rate of the three-month Euribor plus 2.50%. As of March 31, 2025, approximately €2.6 million ($2,760) of this facility was supporting bank guarantees and approximately $nil was available.

FORM 10-Q

QUARTERLY REPORT - PAGE 10

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 6. Pension and Other Post-Retirement Benefit Obligations

Defined Benefit Plans

Pension benefits are based on employees' earnings and years of service. The defined benefit plans are funded by contributions from the Company based on actuarial estimates and statutory requirements. The components of the net benefit costs for the Celgar and Peace River defined benefit plans, in aggregate for the three months ended March 31, 2025 and 2024 were as follows:


	Three Months Ended March 31,
	2025						2024
	Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits
Service cost	$	647		$	34		$	697		$	32
Interest cost		980			108			980			117
Expected return on plan assets		(1,338	)		—			(1,533	)		—
Amortization of unrecognized items		(81	)		(181	)		124			(207	)
Net benefit costs (gains)	$	208		$	(39	)	$	268		$	(58	)

The components of the net benefit costs (gains) other than service cost are recorded in “Other income (expenses)” in the Interim Consolidated Statements of Operations. The amortization of unrecognized items relates to actuarial losses (gains) and prior service costs.

Defined Contribution Plan

Effective December 31, 2008, the defined benefit plans at the Celgar mill were closed to new members and the service accrual ceased. Effective January 1, 2009, the members began to receive pension benefits, at a fixed contractual rate, under a new defined contribution plan. During the three months ended March 31, 2025, the Company made contributions of $211 to this plan (2024 – $320).

Multiemployer Plan

The Company participates in a multiemployer plan for the hourly-paid employees at the Celgar mill. The contributions to the plan are determined based on a percentage of pensionable earnings pursuant to a collective bargaining agreement. The Company has no current or future contribution obligations in excess of the contractual contributions. During the three months ended March 31, 2025, the Company made contributions of $706 to this plan (2024 – $521).

FORM 10-Q

QUARTERLY REPORT - PAGE 11

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 7. Income Taxes

Differences between the U.S. Federal statutory rate and the Company's effective tax rate for the three months ended March 31, 2025 and 2024 were as follows:


	Three Months Ended March 31,
	2025			2024
U.S. Federal statutory rate	21%			21%
Income tax recovery using U.S. Federal statutory rate on loss before income taxes	$	4,537		$	4,844
Tax differential on foreign income		(927	)		(587	)
Effect of foreign earnings (a)		(3,413	)		—
Valuation allowance		(7,242	)		(2,608	)
True-up of prior year taxes		751			1,236
Annual effective tax rate adjustment		6,200			1,700
Change in tax rate		(403	)		1,460
Other, net		(235	)		320
Income tax recovery (provision)	$	(732	)	$	6,365
Comprised of:
Current income tax provision	$	(10,238	)	$	(7,061	)
Deferred income tax recovery		9,506			13,426
Income tax recovery (provision)	$	(732	)	$	6,365

(a)

Primarily due to the impact of the global intangible low-taxed income provision in the Tax Cuts and Jobs Act of 2017.

Note 8. Shareholders' Equity

Dividends

During the three months ended March 31, 2025, the Company's board of directors declared the following quarterly dividend:


Date Declared	Dividend Per Common Share		Amount
February 20, 2025	$	0.075	$	5,015

On May 1, 2025, the Company's board of directors declared a quarterly dividend of $0.075 per common share. Payment of the dividend will be made on July 3, 2025 to all shareholders of record on June 26, 2025. Future dividends are subject to approval by the board of directors and may be adjusted as business and industry conditions warrant.

Stock Based Compensation

The Company's stock incentive plan consists of stock options, restricted stock units (“RSUs”), deferred stock units (“DSUs”), restricted shares, performance shares, performance share units (“PSUs”) and stock appreciation rights. During the three months ended March 31, 2025, there were no issued and outstanding stock options, RSUs, performance shares or stock appreciation rights. As of March 31, 2025, after factoring in all allocated shares, there remain approximately 347 thousand common shares available for grant.

FORM 10-Q

QUARTERLY REPORT - PAGE 12

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

The following table summarizes PSU activity during the period:

Note 9. Net loss Per Common Share

The reconciliation of basic and diluted net loss per common share for the three months ended March 31, 2025 and 2024 was as follows:


	Three Months Ended March 31,
	2025			2024
Net loss
Basic and diluted	$	(22,339	)	$	(16,703	)

Net loss per common share
Basic	$	(0.33	)	$	(0.25	)
Diluted	$	(0.33	)	$	(0.25	)

Weighted average number of common shares outstanding:
Basic (a)		66,893,083			66,641,990
Diluted		66,893,083			66,641,990

(a)

For the three months ended March 31, 2025, the weighted average number of common shares outstanding excludes 21,054 restricted shares which have been issued, but have not vested as of March 31, 2025 (2024 – 54,227 restricted shares) and includes vested Equity DSUs.

The calculation of diluted net loss per common share does not assume the exercise of any instruments that would have an anti-dilutive effect on net loss per common share. Instruments excluded from the calculation of net loss per common share because they were anti-dilutive for the three months ended March 31, 2025 and 2024 were as follows:


	Three Months Ended March 31,
	2025		2024
PSUs		5,169,040		4,851,497
Restricted shares		21,054		54,227
Unvested Equity DSUs		50,397		44,914

FORM 10-Q

QUARTERLY REPORT - PAGE 13

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Note 10. Accumulated Other Comprehensive Loss

The change in the accumulated other comprehensive loss by component (net of tax) for the three months ended March 31, 2025 and 2024 was as follows:


	Foreign Currency Translation Adjustments			Defined Benefit Pension and Other Post-Retirement Benefit Items			Total
Three Months Ended March 31:
Balance as of December 31, 2024	$	(249,997	)	$	19,228		$	(230,769	)
Other comprehensive income before reclassifications		34,337			—			34,337
Amounts reclassified		—			(262	)		(262	)
Other comprehensive income (loss)		34,337			(262	)		34,075
Balance as of March 31, 2025	$	(215,660	)	$	18,966		$	(196,694	)

Balance as of December 31, 2023	$	(145,605	)	$	18,934		$	(126,671	)
Other comprehensive loss before reclassifications		(37,469	)		(90	)		(37,559	)
Amounts reclassified		—			(83	)		(83	)
Other comprehensive loss		(37,469	)		(173	)		(37,642	)
Disposal of investment in joint venture		—			(4,181	)		(4,181	)
Balance as of March 31, 2024	$	(183,074	)	$	14,580		$	(168,494	)

Note 11. Related Party Transactions

For the three months ended March 31, 2025, services from the Company's 50% owned logging and chipping operation were $2,969 (2024 – $3,124) and as of March 31, 2025, the Company had a payable balance to the operation of $404 (December 31, 2024 – receivable of $348).

For the three months ended March 31, 2025, services from the Company's 26% owned wood purchasing operation were $2,229 (2024 – $948) and as of March 31, 2025, the Company had a receivable balance from the operation of $111 (December 31, 2024 – $50).

Note 12. Segment Information

The Company is managed based on the primary products it manufactures: pulp and solid wood. The Company's four pulp mills are aggregated into the pulp segment. The Friesau sawmill, the Torgau facility and the mass timber facilities are aggregated into the solid wood segment. The operating results for the pulp and solid wood segments are regularly reviewed by the Company’s CODM to assess segment performance and to make decisions about resource allocation. The Company’s CODM is the Chief Executive Officer.

Revenues between segments are accounted for at prices that approximate fair value. These include revenues from the sale of residual fiber from the solid wood segment to the pulp segment for use in the pulp production process and from the sale of residual fuel from the pulp segment to the solid wood segment for use in energy production.

FORM 10-Q

QUARTERLY REPORT - PAGE 14

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)

Change in segment measure of profit or loss

In 2024, the Company changed its segment measure from operating income (loss) to net income (loss) before interest, tax, depreciation and amortization and impairments of long-lived assets (“Segment Operating EBITDA”). The CODM uses Segment Operating EBITDA as the primary measure in assessing the operating performance of each reportable segment through periodic reviews and comparison of segment operating trends and identifying strategies to improve the allocation of resources amongst the reportable segments. Segment Operating EBITDA is different from operating income (loss) as it excludes depreciation and amortization and impairment of long-lived assets, as those items are not considered indicative of ongoing core operations. Comparative periods have been recast to conform with the current period’s presentation.

Total assets and the income or loss items following Segment Operating EBITDA, other than depreciation, amortization and impairment of long-lived assets, are not allocated to the segments, as those items are reviewed separately by management.

Information about certain segment data for the three months ended March 31, 2025 and 2024 was as follows:


Three Months Ended March 31, 2025	Pulp		Solid Wood			Total of Segments (a)
Revenues from external customers	$	381,080	$	122,720		$	503,800
Intersegment revenues		344		10,021			10,365
		381,424		132,741			514,165
Less segment expenses:
Fiber		138,284		66,368
Maintenance (b)		41,966		9,193
Freight		35,432		13,324
Labor (c)		24,193		14,647
Chemicals		28,061		—
Energy		14,407		8,424
Other (d)		49,209		21,077
Segment Operating EBITDA	$	49,872	$	(292	)	$	49,580

Purchase of property, plant and equipment	$	13,760	$	6,281		$	20,041

(a)

The total of segments’ Segment Operating EBITDA is reconciled to consolidated loss before income taxes in the Interim Consolidated Statements of Operations as follows:


Three Months Ended March 31, 2025	Pulp			Solid Wood			Total
Reconciliation to loss before income taxes
Total of segments’ Segment Operating EBITDA							$	49,580
Segment depreciation and amortization		(28,222	)		(11,960	)		(40,182	)
Interest expense								(28,155	)
Other expenses								(185	)
Corporate expenses and eliminations								(2,665	)
Consolidated loss before income taxes							$	(21,607	)

(b)

Maintenance expense for the pulp segment includes expenditures for planned annual maintenance downtime at our pulp mills.

(c)

Labor expense excludes maintenance and indirect labor costs.

(d)

Other expenses primarily includes selling, general and administrative expenses and the net change in finished goods inventories.

FORM 10-Q

QUARTERLY REPORT - PAGE 15

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)


Three Months Ended March 31, 2025	Pulp		Solid Wood		Corporate and Other		Consolidated
Revenues from external customers by major products
Pulp	$	356,964	$	—	$	—	$	356,964
Lumber		—		65,386		—		65,386
Energy and chemicals		24,116		4,866		3,174		32,156
Manufactured products (a)		—		18,824		—		18,824
Pallets		—		23,177		—		23,177
Biofuels (b)		—		9,224		—		9,224
Wood residuals		—		1,243		—		1,243
Total revenues from external customers	$	381,080	$	122,720	$	3,174	$	506,974

Revenues from external customers by geography (c)
U.S.	$	38,848	$	47,310	$	642	$	86,800
Foreign countries
Germany		77,058		46,629		161		123,848
China		137,570		393		—		137,963
Other countries		127,604		28,388		2,371		158,363
		342,232		75,410		2,532		420,174
Total revenues from external customers	$	381,080	$	122,720	$	3,174	$	506,974

(a)

Manufactured products primarily includes cross-laminated timber and glue-laminated timber.

(b)

Biofuels includes pellets and briquettes.

(c)

Sales are attributed to countries based on the ship-to location provided by the customer.

FORM 10-Q

QUARTERLY REPORT - PAGE 16

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)


Three Months Ended March 31, 2024	Pulp		Solid Wood			Total of Segments (a)
Revenues from external customers	$	432,404	$	119,023		$	551,427
Intersegment revenues		160		9,722			9,882
		432,564		128,745			561,309
Less segment expenses:
Fiber		150,786		63,603
Maintenance (b)		22,718		11,036
Freight		43,684		13,381
Labor (c)		22,720		14,122
Chemicals		33,398		—
Energy		20,464		6,792
Purchase of pulp from CPP (d)		19,707		—
Other (e)		50,622		20,706
Segment Operating EBITDA	$	68,465	$	(895	)	$	67,570

Purchase of property, plant and equipment	$	9,421	$	9,005		$	18,426

(a)

The total of segments’ Segment Operating EBITDA is reconciled to consolidated loss before income taxes in the Interim Consolidated Statements of Operations as follows:


Three Months Ended March 31, 2024	Pulp			Solid Wood			Total
Reconciliation to loss before income taxes
Total of segments’ Segment Operating EBITDA							$	67,570
Segment depreciation and amortization		(27,373	)		(12,811	)		(40,184	)
Loss on disposal of investment in joint venture		(23,645	)		—			(23,645	)
Interest expense								(27,559	)
Other income								4,939
Corporate expenses and eliminations								(4,189	)
Consolidated loss before income taxes							$	(23,068	)

(b)

Maintenance expense for the pulp segment includes expenditures for planned annual maintenance downtime at our pulp mills.

(c)

Labor expense excludes maintenance and indirect labor costs.

(d)

Purchases of pulp inventory from the Cariboo Pulp & Paper Company mill (“CPP”) prior to the disposition of the Company's equity interest in 2024.

(e)

Other expenses primarily includes selling, general and administrative expenses and the net change in finished goods inventories.

FORM 10-Q

QUARTERLY REPORT - PAGE 17

MERCER INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of U.S. dollars, except share and per share data)


Three Months Ended March 31, 2024	Pulp		Solid Wood		Corporate and Other		Consolidated
Revenues from external customers by major products
Pulp	$	408,295	$	—	$	—	$	408,295
Lumber		—		55,882		—		55,882
Energy and chemicals		24,109		4,838		2,003		30,950
Manufactured products (a)		—		16,713		—		16,713
Pallets		—		28,020		—		28,020
Biofuels (b)		—		11,254		—		11,254
Wood residuals		—		2,316		—		2,316
Total revenues from external customers	$	432,404	$	119,023	$	2,003	$	553,430

Revenues from external customers by geography (c)
U.S.	$	37,589	$	44,195	$	908	$	82,692
Foreign countries
Germany		79,524		54,076		141		133,741
China		182,799		809		—		183,608
Other countries		132,492		19,943		954		153,389
		394,815		74,828		1,095		470,738
Total revenues from external customers	$	432,404	$	119,023	$	2,003	$	553,430

(a)

Manufactured products primarily includes cross-laminated timber and glue-laminated timber.

(b)

Biofuels includes pellets and briquettes.

(c)

Sales are attributed to countries based on the ship-to location provided by the customer.

Note 13. Financial Instruments and Fair Value Measurement

Due to their short-term maturity, the carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and other approximates their fair value. The estimated fair values of the Company's outstanding debt under the fair value hierarchy as of March 31, 2025 and December 31, 2024 were as follows:


	Fair value measurements as of
			March 31, 2025 using:
Description	Level 1			Level 2		Level 3		Total
Revolving credit facilities	$	—		$	198,037	$	—	$	198,037
Senior notes		—			1,173,106		—		1,173,106
	$	—		$	1,371,143	$	—

Number of PSUs

Outstanding as of January 1, 2025

(1,452,061

Outstanding as of March 31, 2025

MERCER INTERNATIONAL INC. 10-Q