Mercer International Inc. Reports Third Quarter 2026 Financial Results

Mercer International Inc. (Nasdaq: MERC), a global forest products company, today announced its financial and operating results for the third quarter ended September 30, 2026.

The company reported significant year-over-year improvement in Operating EBITDA, reflecting the benefits of cost-reduction initiatives, government support for its Peace River mill and improved realizations across certain energy and solid wood products.

Operating EBITDA for the third quarter of 2026 was negative $2.9 million, compared with negative $28.1 million in the third quarter of 2025. Net loss narrowed to $59.2 million, or $0.88 per share, compared with a net loss of $80.8 million, or $1.21 per share, in the prior-year quarter.

Total revenues were $440.7 million, compared with $458.1 million in the third quarter of 2025, primarily reflecting lower pulp sales volumes and realizations, partially offset by higher energy and solid wood products realizations.

KEY FINANCIAL HIGHLIGHTS

For the third quarter ended September 30, 2026:

• Revenue: $440.7 million, compared with $458.1 million in Q3 2025.

• Operating EBITDA: Negative $2.9 million, compared with negative $28.1 million in Q3 2025.

• Net loss: $59.2 million, or $0.88 per share, compared with $80.8 million, or $1.21 per share.

• Operating loss: $38.7 million, compared with $67.6 million in the prior-year quarter.

• Pulp segment Operating EBITDA: Positive $5.9 million, compared with negative $12.7 million.

• Solid wood segment revenue: $128.6 million, an increase of approximately 10% year over year.

OPERATIONAL PERFORMANCE AND BUSINESS DEVELOPMENTS

Pulp Segment

The pulp segment recorded Operating EBITDA of positive $5.9 million in the third quarter of 2026, compared with negative $12.7 million in the corresponding quarter of 2025.

The improvement was primarily driven by government grants recognized at the Peace River mill, cost-reduction initiatives and higher energy sales realizations. These benefits were partially offset by higher fiber costs and lower pulp sales realizations.

Pulp segment revenues were $310.2 million, compared with $339.0 million in the prior-year quarter. Total pulp production declined approximately 11% to 406,519 air-dried metric tonnes, reflecting increased planned maintenance downtime, lower production at German mills and mechanical issues at the Celgar mill.

Solid Wood Segment

Solid wood segment revenues increased approximately 10% to $128.6 million from $117.2 million in Q3 2025. Segment Operating EBITDA improved to negative $7.0 million from negative $9.3 million.

Lumber revenues increased approximately 11% to $68.0 million, supported by higher sales realizations and volumes. Average lumber realizations increased approximately 6% to $586 per thousand board feet.

Manufactured products revenues, primarily comprising cross-laminated timber (CLT) and glue-laminated timber (glulam), increased approximately 53% to $18.7 million.

The company's mass timber business had an order book and commitments of approximately $151 million at the end of the third quarter, supported by large-scale data center infrastructure projects. These contracts are expected to begin contributing to results in late 2026 and during 2027.

RECAPITALIZATION AND BALANCE SHEET INITIATIVES

On November 2, 2026, Mercer announced that it had entered into restructuring support agreements with holders of more than 87% of its outstanding senior notes and holders of a majority of its outstanding common shares.

The proposed comprehensive recapitalization includes the exchange of approximately $1.1 billion of existing senior notes for equity, the elimination of approximately $96 million in annual cash interest on senior notes and the provision of $400 million in new capital through a fully backstopped rights offering of senior secured notes.

The transaction is expected to significantly reduce the company's debt, extend its maturity runway and provide substantial additional liquidity.

The restructuring is being implemented at the parent company and a non-operating subsidiary. Mercer has stated that its operating subsidiaries will continue their businesses in the ordinary course, without impact on customers, suppliers and employees.

Completion remains subject to customary conditions, including requisite regulatory approvals. The company expects to conclude the expedited restructuring process by the end of 2026.

COST OPTIMIZATION AND GOVERNMENT SUPPORT

Mercer's "One Goal One Hundred" program generated an additional $22 million in cost savings during the third quarter, bringing cumulative savings to approximately $76 million since its launch in April 2025.

The company remains on track to achieve its $100 million cost-savings target by the end of 2026.

During the quarter, Mercer also secured approximately $13 million in grants and up to $13.5 million in low-interest repayable contributions for its Peace River mill. The funding will support productivity improvements and modernization initiatives.

MANAGEMENT COMMENTARY

Juan Carlos Bueno, Chief Executive Officer of Mercer International Inc., said:

"During the third quarter, we continued to make progress in improving our operating performance despite challenging market conditions, elevated fiber costs and significant planned maintenance downtime. The substantial improvement in Operating EBITDA reflects the benefits of our cost-reduction initiatives, government support at Peace River and improved realizations across several of our product categories.

"We also made important progress toward strengthening our financial position through the comprehensive recapitalization announced on November 2. With the support of a significant majority of our noteholders and shareholders, this transaction is expected to materially reduce our debt, improve liquidity and provide a stronger financial foundation for the company's future.

"Our focus remains on operational efficiency, disciplined cost management and cash flow preservation as we navigate ongoing industry challenges and position Mercer for long-term stability and growth."

FINANCIAL OUTLOOK

Mercer expects market and industry pressures to continue into the fourth quarter of 2026.

The company anticipates modest increases in softwood pulp prices across its markets, while hardwood pulp prices are expected to remain relatively stable. Lumber prices are expected to remain broadly flat, reflecting weak demand and seasonal factors offset by supply constraints.

Fiber costs at German pulp mills are expected to increase slightly, while Canadian pulp mill fiber costs are expected to decrease following improved supply conditions and renegotiated supply contracts.

The company expects 18 days of planned annual maintenance downtime at its Celgar mill during the fourth quarter.

Mercer will continue prioritizing cost reductions, operational efficiency, working capital optimization and the preservation of cash while advancing its recapitalization.