MERCER INTERNATIONAL INC
For the period ended Sep 30, 2024. Filed Oct 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 31, 2024
MERC$0.26+4.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000950170-24-094099
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0000950170-24-119586
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 229 previous paragraphs and 234 current paragraphs.
115 unchanged; 82 reworded; 36 added; 27 removed; 5 previous and 1 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (36)
Current report
As we move into the fourth quarter of 2024, we currently expect relatively stable pulp sales realizations as somewhat weaker demand is offset by continued supply constraints.
Current report
Total revenues for the third quarter of 2024 increased by approximately 7% to $502.1 million from $470.8 million in the same quarter of 2023 primarily due to higher pulp and manufactured products sales realizations partially offset by lower overall sales volumes. Particularly, in the third quarter of 2024, pulp sales volumes were impacted by several unrelated events, including unscheduled downtime at our Peace River mill, a slower than normal maintenance start-up at our Stendal mill and isolated mechanical incidents at our Celgar mill.
Current report
Costs and expenses in the third quarter of 2024 increased by approximately 4% to $493.3 million from $474.2 million in the same quarter of 2023 driven by higher per unit fiber costs partially offset by lower pulp sales volumes. In the third quarter of 2024, we recorded a $4.0 million non-cash inventory impairment at our Peace River mill as a result of lower NBHK pulp prices. Per unit fiber costs increased relative to the third quarter of 2023 because the comparative period included the sale and revaluation of previously impaired inventory. After giving effect to such impairments, overall per unit fiber costs in the third quarter of 2024 decreased slightly compared to the same period of 2023.
Current report
In the third quarter of 2024, our operating income was $8.8 million compared to an operating loss of $3.4 million in the same quarter of 2023 primarily as a result of higher pulp and manufactured products sales realizations partially offset by higher costs and expenses and lower pulp sales volumes as a result of unplanned downtime.
Current report
In the third quarter of 2024, Operating EBITDA increased by approximately 35% to $50.5 million from $37.5 million in the same quarter of 2023 primarily due to higher pulp and manufactured products sales realizations partially offset by higher costs and expenses and lower pulp sales volumes as a result of unplanned downtime.
Current report
Total pulp production in the third quarter of 2024 decreased by approximately 13% to 415,837 ADMTs compared with 479,924 ADMTs in the same quarter of 2023 as a result of the disposal of the CPP joint venture investment in the first quarter of 2024, unplanned downtime at the Peace River mill to complete necessary repairs to the mill’s digester after experiencing a mechanical failure, the impacts of a slower than normal maintenance start-up at our Stendal mill and isolated mechanical incidents at our Celgar mill, partially offset by the port strike related curtailment at the Celgar mill in the third quarter of 2023. In the third quarter of 2024, our pulp mills had 43 days of downtime (approximately 57,600 ADMTs) which included 20 days of planned annual maintenance and 23 days of unplanned downtime at the Peace River mill. In the third quarter of 2023, our pulp mills had 39 days of downtime (approximately 48,400 ADMTs) which included 13 days for planned annual maintenance downtime and 26 days for the curtailment at the Celgar mill.
Current report
The Peace River mill had an additional 12 days of unplanned downtime in the fourth quarter of 2024 in connection with the completion of repairs to the mill’s digester. We currently do not have any remaining planned annual maintenance downtime in the fourth quarter of 2024.
Current report
Costs and expenses in the third quarter of 2024 increased by approximately 6% to $348.6 million from $327.9 million in the same quarter of 2023 primarily due to higher per unit fiber, maintenance and freight costs and the negative impact of a weaker dollar, partially offset by lower pulp sales volumes and lower per unit energy and chemical costs.
Current report
On average, in the third quarter of 2024, overall per unit fiber costs increased by approximately 25% compared to the same quarter of 2023. In the third quarter of 2024 we recorded a $4.0 million non-cash inventory impairment at our Peace River mill caused by low NBHK pulp prices. Per unit fiber costs increased relative to the third quarter of 2023 because the comparative period included the sale and revaluation of previously impaired inventory. After giving effect to such impairments, per unit fiber costs in the third quarter of 2024 decreased slightly compared to the same period of 2023. We currently expect relatively flat per unit fiber costs in the fourth quarter of 2024.
Current report
Lumber revenues in the third quarter of 2024 modestly decreased to $49.1 million from $50.8 million in the same quarter of 2023 primarily as a result of lower sales volumes.
Current report
Lumber production in the third quarter of 2024 increased by approximately 30% to 122.5 MMfbm from 94.4 MMfbm in the same quarter of 2023 primarily due to lower planned maintenance downtime and higher production at our Torgau facility.
Current report
Lumber sales volumes in the third quarter of 2024 decreased by approximately 5% to 108.8 MMfbm from 114.7 MMfbm in the same quarter of 2023 as a result of the timing of sales.
Current report
Consolidated – Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
Costs and expenses in the nine months ended September 30, 2024 decreased by approximately 4% to $1,590.3 million from $1,655.7 million in the same period of 2023 primarily as a result of lower per unit fiber, energy and chemical costs and lower lumber and pulp sales volumes partially offset by higher planned maintenance downtime at our pulp mills, the non-cash goodwill impairment and the non-cash loss on disposal of the CPP joint venture investment.
Current report
In the nine months ended September 30, 2024, other income decreased by approximately 6% to $9.1 million from $9.7 million in the same period of 2023. Other income in the nine months ended September 30, 2024 and 2023 primarily consisted of interest earned on cash.
Current report
In the nine months ended September 30, 2024, Operating EBITDA increased to $144.5 million from negative Operating EBITDA of $3.7 million in the same period of 2023 primarily as a result of lower per unit fiber and other production costs and higher pulp, manufactured products and lumber sales realizations partially offset by lower sales realizations from our other products and higher planned maintenance downtime at our pulp mills.
Current report
Pulp Segment– Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
Pulp revenues in the nine months ended September 30, 2024 increased by approximately 4% to $1,109.3 million from $1,061.9 million in the same period of 2023 as a result of higher sales realizations partially offset by lower sales volumes.
Current report
Energy and chemical revenues in the nine months ended September 30, 2024 decreased by approximately 29% to $63.8 million from $90.0 million in the same period of 2023 primarily due to lower sales realizations.
Current report
Total pulp sales volumes in the nine months ended September 30, 2024 remained generally flat at 1,447,840 ADMTs from 1,460,050 ADMTs in the same period of 2023.
Current report
Transportation costs for our pulp segment in the nine months ended September 30, 2024 modestly decreased to $113.9 million from $118.0 million in the same period of 2023 primarily driven by lower freight rates.
Current report
Solid Wood Segment– Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
Lumber revenues in the nine months ended September 30, 2024 decreased by approximately 7% to $158.9 million from $170.1 million in the same period of 2023 primarily due to lower sales volumes partially offset by higher sales realizations.
Current report
Lumber production in the nine months ended September 30, 2024 modestly increased to 360.9 MMfbm from 350.7 MMfbm in the same period of 2023.
Current report
Lumber sales volumes in the nine months ended September 30, 2024 decreased by approximately 11% to 346.8 MMfbm from 388.4 MMfbm in the same period of 2023 primarily due to timing of sales.
Current report
Financing activities in the nine months ended September 30, 2023 provided cash of $230.6 million. In the nine months ended September 30, 2024 we received proceeds from the issuance of $200.0 million of 2028 Senior Notes and borrowed approximately $51.3 million under our revolving credit facilities. In the nine months ended September 30, 2023, we paid dividends of $10.0 million, and incurred aggregate debt issuance costs of $4.6 million related to the issuance of the 2028 Senior Notes and the increase in our maximum borrowing capacity under our German revolving credit facility.
Current report
In October 2024, we completed an add-on offering of $200.0 million of our existing 2028 Senior Notes. The new issuance was at a 103.000% premium to their principal amount, for a yield to worst of 11.624%. The proceeds and cash on hand were used to redeem $300.0 million in principal amount of 2026 Senior Notes.
Current report
Credit Ratings of Senior Notes
Current report
We and our senior notes are rated by Standard & Poor's Rating Services, referred to as “S&P”, Moody's Investors Service, Inc., referred to as “Moody's” and Fitch Ratings, referred to as “Fitch”.
Current report
S&P, Moody’s and Fitch base their assessment of the credit risk on our senior notes on the business and financial profile of Mercer Inc. and our restricted subsidiaries under the indentures governing the senior notes. Factors that may affect our credit rating include changes in our operating performance and liquidity. Credit rating downgrades can adversely impact, among other things, future borrowing costs and access to capital markets.
Current report
In August 2024, Moody's downgraded its rating on our senior notes to B3 from B2 and confirmed its outlook is negative. In October 2024, S&P confirmed its outlook is negative and confirmed its rating on our senior notes is B. In October 2024, Fitch assigned its first time rating on our senior notes as B+ and gave a stable rating for its outlook.
Current report
Credit ratings are not recommendations to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organization. Each rating should be evaluated independently of any other rating.
Current report
QUARTERLY REPORT - PAGE 40
Current report
Risks Related to Macroeconomic Conditions
Current report
QUARTERLY REPORT - PAGE 41
Current report
QUARTERLY REPORT - PAGE 43
Removed paragraphs (27)
Previous report
As we move into the third quarter of 2024, we currently expect the supply-side disruptions experienced in the second quarter to ease and traditionally lower seasonal demand to cause slight softening of pulp prices generally.
Previous report
Total revenues for the second quarter of 2024 decreased by approximately 6% to $499.4 million from $529.9 million in the same quarter of 2023 primarily due to lower pulp and lumber sales volumes partially offset by higher pulp sales realizations and manufactured products revenues.
Previous report
In the second quarter of 2024, our operating loss was $43.8 million compared to $108.8 million in the same quarter of 2023 primarily as a result of higher pulp sales realizations and lower per unit fiber, energy and chemical costs partially offset by the non-cash goodwill impairment recognized in the second quarter of 2024. In the second quarter of 2023, we recorded a non-cash inventory impairment which was partially offset by insurance proceeds received.
Previous report
In the second quarter of 2024, Operating EBITDA increased to $30.4 million from negative Operating EBITDA of $68.7 million in the same quarter of 2023 primarily due higher pulp sales realizations and lower per unit fiber, energy and chemical costs. In the second quarter of 2023, we recorded a non-cash inventory impairment which was partially offset by insurance proceeds received.
Previous report
Pulp revenues in the second quarter of 2024 decreased by approximately 7% to $346.8 million from $374.2 million in the same quarter of 2023 as a result of lower sales volumes partially offset by higher sales realizations.
Previous report
In the third quarter of 2024, we currently expect a total of 18 days of annual maintenance downtime (approximately 19,700 ADMTs) at our pulp mills.
Previous report
Costs and expenses in the second quarter of 2024 decreased by approximately 25% to $364.0 million from $486.3 million in the same quarter of 2023 primarily due to lower sales volumes and lower per unit fiber, energy and chemical costs. In the second quarter of 2023, we recorded a non-cash inventory impairment of $51.4 million which was partially offset by $22.0 million of insurance proceeds received relating to the 2021 turbine downtime at our Rosenthal mill and the July 2022 fire at our Stendal mill.
Previous report
On average, in the second quarter of 2024, overall per unit fiber costs decreased by approximately 15% compared to the same quarter of 2023 due to stable supply. We currently expect stable per unit fiber costs in the third quarter of 2024.
Previous report
In the second quarter of 2024, transportation costs for our pulp segment decreased by approximately 30% to $33.7 million from $48.3 million in the same quarter of 2023 driven by lower pulp sales volumes and freight rates.
Previous report
Lumber revenues in the second quarter of 2024 decreased by approximately 9% to $53.9 million from $59.3 million in the same quarter of 2023 primarily as a result of lower sales volumes partially offset by a modestly higher sales realization.
Previous report
Lumber production in the second quarter of 2024 decreased by approximately 9% to 111.4 MMfbm from 122.3 MMfbm in the same quarter of 2023 primarily due to planned maintenance downtime.
Previous report
Lumber sales volumes in the second quarter of 2024 decreased by approximately 13% to 116.6 MMfbm from 133.9 MMfbm in the same quarter of 2023 as a result of lower production and the timing of sales.
Previous report
Consolidated – Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
In April 2024, we announced our agreement with West Fraser Mills Ltd. (“West Fraser”) to dissolve the joint venture relating to CPP. As a result, West Fraser continued as the sole owner and operator of CPP. In the first quarter of 2024, we recognized a non-cash loss of $23.6 million in connection with the dissolution of the CPP joint venture.
Previous report
Costs and expenses in the first half of 2024 decreased by approximately 7% to $1,097.0 million from $1,181.5 million in the same period of 2023 primarily as a result of lower per unit fiber, energy and chemical costs partially offset by the non-cash goodwill impairment of $34.3 million and the non-cash loss on disposal of the CPP joint venture investment of $23.6 million. In the first half of 2023, we recorded a non-cash inventory impairment of $66.6 million which was partially offset by $29.5 million of insurance proceeds received.
Previous report
QUARTERLY REPORT - PAGE 30 fees.
Previous report
In the first half of 2024, Operating EBITDA increased to $94.0 million from negative Operating EBITDA of $41.2 million in the same period of 2023 primarily as a result of lower per unit fiber, energy and chemical costs. In the first half of 2023, we recorded a non-cash inventory impairment which was partially offset by insurance proceeds received.
Previous report
Pulp Segment– Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
Energy and chemical revenues in the first half of 2024 decreased by approximately 25% to $44.7 million from $59.3 million in the same period of 2023 primarily due to lower sales realizations.
Previous report
Total pulp sales volumes in the first half of 2024 modestly increased to 998,984 ADMTs from 972,851 ADMTs in the same period of 2023 primarily because of the timing of sales.
Previous report
Solid Wood Segment– Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
Lumber revenues in the first half of 2024 decreased by approximately 8% to $109.8 million from $119.3 million in the same period of 2023 primarily due to lower sales volumes partially offset by modestly higher sales realization.
Previous report
Lumber production in the first half of 2024 decreased by approximately 7% to 238.4 MMfbm from 256.3 MMfbm in the same period of 2023 driven by planned maintenance downtime and overall weak demand.
Previous report
Lumber sales volumes in the first half of 2024 decreased by approximately 13% to 238.0 MMfbm from 273.7 MMfbm in the same period of 2023 primarily due to lower production and timing of sales.
Previous report
Financing activities in the six months ended June 30, 2023 provided cash of $45.4 million. In the six months ended June 30, 2023, we borrowed approximately $54.4 million under our revolving credit facilities and paid dividends of $5.0 million.
Previous report
QUARTERLY REPORT - PAGE 37 following:
Previous report
Risks Related to Macro-economic Conditions
Reworded paragraphs (82)
Previous wording
The following discussion and analysis of our results of operations and financial condition for the three and six months ended June 30, 2024 should be read in conjunction with our Interim Consolidated Financial Statements and related notes included in this quarterly report, as well as our most recent annual report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission, referred to as the “SEC”.
Current wording
The following discussion and analysis of our results of operations and financial condition for the three and nine months ended September 30, 2024 should be read in conjunction with our Interim Consolidated Financial Statements and related notes included in this quarterly report, as well as our most recent annual report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission, referred to as the “SEC”.
Previous wording
In the second quarter of 2024, our pulp sales realizations continued to improve in all our key markets due to strengthening demand and supply-side disruptions. Our lumber sales realizations in the second quarter of 2024 were flat when compared to the first quarter of 2024 as a result of continued weakness in both the U.S. and Europe.
Current wording
In the third quarter of 2024, we continued to benefit from strong softwood pulp markets as prices remained mostly stable during a period of traditionally weaker seasonal demand. In the third quarter of 2024, hardwood prices decreased in China when compared to the second quarter of 2024 as the market absorbed increased hardwood capacity. In the third quarter of 2024, our lumber sales realizations were slightly down compared to the second quarter of 2024 as a result of continued weakness in both the U.S. and Europe.
Previous wording
As of June 30, 2024, the third party industry quoted NBSK list price in Europe was a record $1,635 per ADMT and in North America was approximately $1,790 per ADMT and the third party industry quoted NBSK net price in China was approximately $810 per ADMT. Prices for China are net of discounts, allowances and rebates.
Current wording
As of September 30, 2024, the third party industry quoted NBSK pulp list price in Europe and North America were approximately $1,535 per ADMT and $1,735 per ADMT, respectively, and the third party industry quoted NBSK pulp net price in China was approximately $754 per ADMT. Prices for China are net of discounts, allowances and rebates.
Previous wording
In our solid wood segment, we currently expect U.S. and European lumber prices and pallet prices to remain relatively steady in the third quarter of 2024 due to continued weak demand stemming from the high interest rate environment and economic uncertainty. We currently expect mass timber prices to remain relatively flat in the third quarter of 2024 as we complete previously secured orders for large scale projects.
Current wording
In our solid wood segment, we currently expect U.S. and European lumber prices to increase in the fourth quarter of 2024 due to modestly stronger demand and reduced supply and pallet prices to remain flat due to weak economic conditions in Europe. We currently expect relatively steady mass timber prices in the fourth quarter of 2024.
Previous wording
Per unit fiber costs for the pulp and solid wood segments were flat in the second quarter of 2024 compared to the first quarter of 2024. For the third quarter of 2024, we currently expect stable per unit fiber costs.
Current wording
Per unit fiber costs for the pulp and solid wood segments were flat in the third quarter of 2024 compared to the second quarter of 2024. For the fourth quarter of 2024, we currently expect relatively stable per unit fiber costs in our pulp segment and modestly higher per unit fiber costs in our solid wood segment due to strong demand.
Previous wording
The following table provides a reconciliation of net loss to operating loss and Operating EBITDA for the periods indicated:
Current wording
The following table provides a reconciliation of net loss to operating income (loss) and Operating EBITDA for the periods indicated:
Previous wording
In the second quarter of 2024, cost of sales depreciation and amortization was flat at $39.9 million compared to $40.1 million in the same quarter of 2023.
Current wording
In the third quarter of 2024, cost of sales depreciation and amortization was flat at $41.5 million compared to $40.9 million in the same quarter of 2023.
Previous wording
Selling, general and administrative expenses decreased by approximately 8% to $29.8 million in the second quarter of 2024 from $32.4 million in the same quarter of 2023 primarily due to lower employee compensation.
Current wording
Selling, general and administrative expenses decreased slightly to $29.2 million in the third quarter of 2024 from $30.1 million in the same quarter of 2023 primarily due to lower employee compensation.
Previous wording
Interest expense increased by approximately 33% to $26.8 million in the second quarter of 2024 from $20.1 million in the same quarter of 2023 primarily due to the issuance of $200.0 million of 12.875% senior notes in September 2023.
Current wording
Interest expense increased by approximately 21% to $26.4 million in the third quarter of 2024 from $21.9 million in the same quarter of 2023 primarily due to the issuance in September 2023 of $200.0 million of 12.875% senior notes which mature on October 1, 2028 (the “2028 Senior Notes”).
Previous wording
In the second quarter of 2024, other income increased to $4.3 million from $3.1 million in the same quarter of 2023. Other income in the second quarter of 2024 primarily consisted of interest earned on cash and foreign exchange gains on dollar denominated cash held at our operations as the dollar strengthened at the end of the second quarter of 2024. In the second quarter of 2023, other income primarily consisted of interest earned on cash.
Current wording
In the third quarter of 2024, other expenses were $0.1 million compared to other income of $3.3 million in the same quarter of 2023. Other expenses in the third quarter of 2024 primarily consisted of foreign exchange losses on dollar denominated cash held at our operations as the dollar weakened at the end of the third quarter of 2024 mostly offset by interest earned on cash. In the third quarter of 2023, other income primarily consisted of interest earned on cash.
Previous wording
During the second quarter of 2024, we had an income tax provision of $1.3 million primarily as a result of the non-deductibility of the non-cash goodwill impairment and because we did not recognize a tax recovery for certain entities which we do not expect to realize a tax benefit. In the same quarter of 2023, we had an income tax recovery of $27.5 million, or an effective tax rate of 22%.
Current wording
In the third quarter of 2024, we had an income tax recovery of $0.1 million, or an effective tax rate of 1%, and in the same quarter of 2023, we had an income tax provision of $4.0 million, on a loss before income taxes. Our effective tax rates were different from the statutory rates of the jurisdictions in which we operate as we do not recognize tax recoveries for certain entities which we do not expect to realize a tax benefit.
Previous wording
In the second quarter of 2024, our net loss was $67.6 million, or $1.01 per share, compared to $98.3 million, or $1.48 per share in the same quarter of 2023. The net loss in the second quarter of 2024 included the non-cash goodwill impairment of $34.3 million, or $0.51 per share.
Current wording
In the third quarter of 2024, our net loss was $17.6 million, or $0.26 per share, compared to $26.0 million, or $0.39 per share in the same quarter of 2023.
Previous wording
None of the income or loss items following operating loss in our Interim Consolidated Statements of Operations are allocated to our segments, since those items are reviewed separately by management.
Current wording
None of the income or loss items following operating income (loss) in our Interim Consolidated Statements of Operations are allocated to our segments, since those items are reviewed separately by management.
Previous wording
Pulp segment revenues, which includes pulp, energy and chemical revenues, in the second quarter of 2024 decreased by approximately 9% to $367.4 million from $402.7 million in the same quarter of 2023 primarily due to lower sales volumes and lower energy and chemical sales realizations partially offset by higher pulp sales realizations.
Current wording
Pulp segment revenues, which includes pulp, energy and chemical revenues, in the third quarter of 2024 increased by approximately 7% to $373.3 million from $348.9 million in the same quarter of 2023 as higher pulp revenues were partially offset by lower energy and chemical revenues.
Previous wording
Pulp revenues in the first half of 2024 modestly increased to $755.1 million from $743.8 million in the same period of 2023 as a result of higher sales volumes partially offset by lower sales realizations.
Current wording
Pulp revenues in the third quarter of 2024 increased by approximately 11% to $354.2 million from $318.1 million in the same quarter of 2023 as a result of higher sales realizations partially offset by lower sales volumes.
Previous wording
Energy, biofuels and wood residuals revenues in the second quarter of 2024 decreased by approximately 22% to $14.2 million from $18.1 million in the same quarter of 2023 due to lower sales realizations and sales volumes.
Current wording
Energy and chemical revenues in the third quarter of 2024 decreased by approximately 38% to $19.1 million from $30.8 million in the same quarter of 2023 primarily due to lower sales realizations and sales volumes.
Previous wording
We estimate that annual maintenance downtime in the second quarter of 2024 adversely impacted our operating income by approximately $60.2 million, comprised of approximately $44.9 million in direct out-of-pocket expenses and the balance in reduced production.
Current wording
We estimate that annual maintenance downtime in the third quarter of 2024 adversely impacted our operating income by approximately $17.8 million, comprised of approximately $11.2 million in direct out-of-pocket expenses and the balance in reduced production. We estimate that unplanned downtime at the Peace River mill in the third quarter of 2024 adversely impacted our operating income by approximately $9.2 million in direct out-of-pocket expenses and reduced production.
Previous wording
Total pulp sales volumes in the second quarter of 2024 decreased by approximately 19% to 433,320 ADMTs from 536,878 ADMTs in the same quarter of 2023 primarily due to lower production and the timing of sales.
Current wording
Total pulp sales volumes in the third quarter of 2024 decreased by approximately 8% to 448,856 ADMTs from 487,199 ADMTs in the same quarter of 2023 primarily due to lower production.
Previous wording
In the second quarter of 2024, third party industry quoted average list prices for NBSK pulp increased in both Europe and North America from the same quarter of 2023, including achieving a record list price of $1,635 per ADMT in Europe as of June 30, 2024. Third party industry quoted average net prices for NBSK pulp in China also increased from the same quarter of 2023. Average list prices for NBSK pulp in Europe and North America were approximately $1,602 per ADMT and $1,697 per ADMT, respectively, in the second quarter of 2024 compared to approximately $1,247 per ADMT and $1,510 per ADMT, respectively, in the same quarter of 2023. Average NBSK net prices in China were approximately $811 per ADMT in the second quarter of 2024 compared to approximately $668 per ADMT in the same quarter of 2023. Prices quoted for China are net of discounts, allowances and rebates whereas quoted prices for Europe and North America are before applicable discounts, allowances and rebates.
Current wording
In the third quarter of 2024, third party industry quoted average list prices for NBSK pulp increased in both Europe and North America from the same quarter of 2023. Third party industry quoted average net prices for NBSK pulp in China also increased from the same quarter of 2023. Average list prices for NBSK pulp in Europe and North America were approximately $1,573 per ADMT and $1,762 per ADMT, respectively, in the third quarter of 2024 compared to approximately $1,160 per ADMT and $1,293 per ADMT, respectively, in the same quarter of 2023. Average NBSK pulp net prices in China were approximately $771 per ADMT in the third quarter of 2024 compared to approximately $680 per ADMT in the same quarter of 2023. Prices quoted for China are net of discounts, allowances and rebates whereas quoted prices for Europe and North America are before applicable discounts, allowances and rebates.
Previous wording
Our average NBSK pulp sales realizations in the second quarter of 2024 increased by approximately 15% to $811 per ADMT from $706 per ADMT in the same quarter of 2023. In the second quarter of 2024, average NBHK pulp sales realizations increased by approximately 16% to $701 per ADMT from $602 per ADMT in the same quarter of 2023.
Current wording
Our average NBSK pulp sales realizations in the third quarter of 2024 increased by approximately 22% to $814 per ADMT from $666 per ADMT in the same quarter of 2023. In the third quarter of 2024, average NBHK pulp sales realizations increased by approximately 19% to $632 per ADMT from $530 per ADMT in the same quarter of 2023.
Previous wording
In the second quarter of 2024, we had a positive impact of approximately $8.3 million in operating income driven by foreign exchange compared to the same quarter of 2023.
Current wording
In the third quarter of 2024, primarily due to the effect of a weaker dollar on dollar denominated receivables held by our mills, we had a negative impact of approximately $5.9 million in operating income driven by foreign exchange compared to the same quarter of 2023.
Previous wording
Transportation costs for our pulp segment in the first half of 2024 decreased by approximately 8% to $77.4 million from $83.7 million in the same period of 2023 driven by lower freight rates partially offset by higher pulp sales volumes.
Current wording
In the third quarter of 2024, transportation costs for our pulp segment increased by approximately 6% to $36.5 million from $34.3 million in the same quarter of 2023 driven by higher freight rates partially offset by lower pulp sales volumes.
Previous wording
In the second quarter of 2024, depreciation and amortization was relatively flat at $27.2 million compared to $27.8 million in the same quarter of 2023.
Current wording
In the third quarter of 2024, depreciation and amortization was relatively flat at $28.7 million compared to $28.2 million in the same quarter of 2023.
Previous wording
Pulp segment operating income increased to $4.5 million in the second quarter of 2024 from an operating loss of $83.5 million in the same quarter of 2023 primarily due to higher pulp sales realizations and lower per unit fiber and other production costs. In the second quarter of 2023, we recorded a non-cash inventory impairment which was partially offset by insurance proceeds received.
Current wording
Pulp segment operating income increased by approximately 23% to $26.0 million in the third quarter of 2024 from $21.2 million in the same quarter of 2023 primarily due to higher pulp sales realizations partially offset by higher costs and expenses and lower sales volumes caused by unplanned downtime.
Previous wording
Solid wood segment revenues in the second quarter of 2024 modestly increased to $130.2 million from $126.1 million in the same quarter of 2023 due to higher manufactured products revenues partially offset by lower revenues from our other products.
Current wording
Solid wood segment revenues in the third quarter of 2024 increased by approximately 5% to $125.1 million from $119.5 million in the same quarter of 2023 due to higher manufactured products revenues partially offset by lower revenues from our other products.
Previous wording
Energy and chemical revenues in the second quarter of 2024 decreased by approximately 28% to $20.6 million from $28.5 million in the same quarter of 2023 primarily due to lower sales realizations and energy sales volumes.
Current wording
Energy, biofuels and wood residuals revenues in the third quarter of 2024 decreased by approximately 28% to $13.7 million from $19.1 million in the same quarter of 2023 primarily due to lower biofuels and wood residuals sales realizations and lower energy sales volumes.
Previous wording
In the second quarter of 2024, as a result of the continued ramp-up of our mass timber business, manufactured products revenues more than doubled to $35.4 million from $16.0 million in the same quarter of 2023.
Current wording
In the third quarter of 2024, as a result of the continued ramp-up of our mass timber business, manufactured products revenues increased by approximately 71% to $35.8 million from $20.9 million in the same quarter of 2023.
Previous wording
Pallet revenues in the second quarter of 2024 decreased by approximately 18% to $26.7 million from $32.7 million in the same quarter of 2023 as a result of lower sales volumes and sales realizations as weak economic conditions in Europe negatively impacted demand.
Current wording
Pallet revenues in the third quarter of 2024 decreased by approximately 8% to $26.5 million from $28.8 million in the same quarter of 2023 as a result of lower sales volumes as weak economic conditions in Europe negatively impacted demand.
Previous wording
Average lumber sales realizations in the second quarter of 2024 increased by approximately 5% to $463 per Mfbm from $443 per Mfbm in the same quarter of 2023 driven by a modest increase in demand in the U.S. market. In Europe, realized lumber prices were flat compared to the same quarter of 2023. The U.S. market accounted for approximately 45% of our lumber revenues and approximately 39% of our lumber sales volumes in the second quarter of 2024. The majority of the balance of our lumber sales were to Europe.
Current wording
Average lumber sales realizations in the third quarter of 2024 increased to $451 per Mfbm from $443 per Mfbm in the same quarter of 2023 driven by a modest increase in demand in Europe. In the U.S. market, realized lumber prices decreased compared to the same quarter of 2023 due to weak demand. The U.S. market accounted for approximately 46% of our lumber revenues and approximately 43% of our lumber sales volumes in the third quarter of 2024. The majority of the balance of our lumber sales were to Europe.
Previous wording
Manufactured products sales realizations increased by approximately 31% to $2,942 per m 3 in the second quarter of 2024 from $2,243 per m 3 in the same quarter of 2023 as a result of higher CLT sales volumes, which generate higher sales realizations relative to other manufactured products.
Current wording
Manufactured products sales realizations increased to $3,463 per m 3 in the third quarter of 2024 from $1,752 per m 3 in the same quarter of 2023 as a result of higher CLT and glulam sales realizations.
Previous wording
Fiber costs were approximately 75% of our lumber cash production costs in the second quarter of 2024. In the second quarter of 2024, per unit fiber costs for lumber production decreased by approximately 12% compared to the same quarter of 2023 because of stable supply. We currently expect stable per unit fiber costs in the third quarter of 2024.
Current wording
Fiber costs were approximately 70% of our lumber cash production costs in the third quarter of 2024. In the third quarter of 2024, per unit fiber costs for lumber production were relatively flat compared to the same quarter of 2023. We currently expect modestly increasing per unit fiber costs in the fourth quarter of 2024 due to strong demand.
Previous wording
In the second quarter of 2024, depreciation and amortization was relatively flat at $12.5 million compared to $12.1 million in the same quarter of 2023.
Current wording
In the third quarter of 2024, depreciation and amortization was relatively flat at $12.7 million compared to $12.5 million in the same quarter of 2023.
Previous wording
Transportation costs for our solid wood segment in the second quarter of 2024 decreased by approximately 12% to $14.5 million from $16.4 million in the same quarter of 2023 as a result of lower sales volumes.
Current wording
Transportation costs for our solid wood segment in the third quarter of 2024 decreased by approximately 9% to $12.6 million from $13.9 million in the same quarter of 2023 primarily as a result of lower sales volumes.
Previous wording
In the second quarter of 2024, our solid wood segment had an operating loss of $43.7 million compared to $22.5 million in the same quarter of 2023 primarily due to the non-cash goodwill impairment charge partially offset by higher mass timber sales volumes and lower per unit fiber costs.
Current wording
In the third quarter of 2024, our solid wood segment had an operating loss of $14.7 million compared to $19.7 million in the same quarter of 2023 primarily due to the higher mass timber sales realizations partially offset by lower biofuels and wood residuals sales realizations.
Previous wording
Total revenues for the first half of 2024 were flat at $1,052.8 million compared to $1,052.5 million in the same period of 2023 as higher manufactured products sales revenues and pulp sales volumes were offset by lower lumber sales volumes and lower energy, pallet and pulp sales realizations.
Current wording
Total revenues for the nine months ended September 30, 2024 modestly increased to $1,555.0 million from $1,523.4 million in the same period of 2023 as higher pulp, manufactured products and lumber sales realizations were mostly offset by lower sales realizations from our other products and lower lumber sales volumes.
Previous wording
Costs and expenses in the second quarter of 2024 decreased by approximately 15% to $543.2 million from $638.7 million in the same quarter of 2023 driven by lower pulp and lumber sales volumes and lower per unit fiber, energy and chemical costs. In the second quarter of 2024, costs and expenses included a non-cash goodwill impairment of $34.3 million related to the Torgau facility, which was recognized as a result of ongoing weakness in lumber, pallet and biofuels markets in Europe stemming from high interest rates and other economic conditions. We continue to expect to realize the synergies from the Torgau acquisition as market and economic conditions improve. In the second quarter of 2023, we recorded a non-cash inventory impairment of $51.4 million, which was partially offset by $22.0 million of insurance proceeds received relating to the 2021 turbine downtime at our Rosenthal mill and the July 2022 fire at our Stendal mill.
Current wording
In the nine months ended September 30, 2024, costs and expenses included a non-cash loss of $23.6 million in connection with the dissolution of the CPP joint venture and a non-cash goodwill impairment of $34.3 million related to the Torgau facility, which was recognized as a result of ongoing weakness in lumber, pallet and biofuels markets in Europe stemming from high interest rates and other economic conditions. We have achieved some of the planned synergies from the Torgau acquisition and expect to realize further synergies as market and economic conditions improve.
Previous wording
In the first half of 2024, cost of sales depreciation and amortization decreased by approximately 8% to $80.2 million from $87.6 million in the same period of 2023 primarily due to the amortization in the first quarter of 2023 of an order backlog intangible asset acquired in the Torgau facility acquisition, which has been fully amortized.
Current wording
In the nine months ended September 30, 2024, cost of sales depreciation and amortization decreased by approximately 5% to $121.8 million from $128.5 million in the same period of 2023 primarily due to the amortization in the first quarter of 2023 of an order backlog intangible asset acquired in the Torgau facility acquisition, which has been fully amortized.
Previous wording
Selling, general and administrative expenses decreased by approximately 7% to $61.5 million in the first half of 2024 from $66.3 million in the same period of 2023 primarily as a result of lower employee compensation and consulting
Current wording
Selling, general and administrative expenses decreased by approximately 6% to $90.6 million in the nine months ended September 30, 2024 from $96.4 million in the same period of 2023 primarily as a result of lower employee compensation and consulting fees.
Previous wording
In the first half of 2024, our operating loss was $44.2 million compared to $129.0 million in the same period of 2023 primarily due to lower per unit fiber, energy and chemical costs partially offset by the non-cash goodwill impairment and the non-cash loss on disposal of the CPP joint venture investment. In the first half of 2023, we recorded a non-cash inventory impairment which was partially offset by insurance proceeds received.
Current wording
In the nine months ended September 30, 2024, our operating loss was $35.4 million compared to $132.4 million in the same period of 2023 primarily due to lower per unit fiber and other production costs and higher pulp, manufactured products and lumber sales realizations partially offset by lower sales realizations from our other products, higher planned maintenance downtime, the non-cash goodwill impairment and the non-cash loss on disposal of the CPP joint venture investment.
Previous wording
Interest expense in the first half of 2024 increased by approximately 39% to $54.4 million from $39.1 million in the same period of 2023 primarily as a result of the issuance of $200.0 million of 12.875% senior notes in September 2023.
Current wording
Interest expense in the nine months ended September 30, 2024 increased by approximately 32% to $80.8 million from $61.0 million in the same period of 2023 primarily as a result of the issuance of $200.0 million of 2028 Senior Notes in September 2023.
Showing the first 40 of 82 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
QUARTERLY REPORT - PAGE 42 short-term losses on product sales or cease production at one or more of our mills. Therefore, our profitability depends on managing our cost structure, particularly raw materials which represent a significant component of our operating costs and can fluctuate based upon factors beyond our control. If the prices of our products decline, or if prices for our raw materials increase, or both, our results of operations and cash flows could be materially adversely affected.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Total pulp production in the second quarter of 2024 decreased by approximately 11% to 421,692 ADMTs compared with 475,615 ADMTs in the same quarter of 2023 as a result of higher production lost for annual maintenance downtime and the disposal of the CPP joint venture investment in the first quarter of 2024, partially offset by the market curtailment at the Peace River and CPP mills in the second quarter of 2023. In the second quarter of 2024, our pulp mills had 44 days of downtime (approximately 77,600 ADMTs) which included 37 days of planned annual maintenance and seven additional days due to slower than expected start-up. In the second quarter of 2023, our pulp mills had 60 days of downtime (approximately 59,000 ADMTs) which included 25 days for annual maintenance and 35 days for market curtailment at the Peace River and CPP mills.
Previous report — wording carried elsewhere
In the first half of 2024, other income increased by approximately 44% to $9.2 million from $6.4 million in the same period of 2023. Other income in the first half of 2024 primarily consisted of interest earned on cash and foreign exchange gains on dollar denominated cash held at our operations as the dollar strengthened at the end of the second quarter of 2024. In the first half of 2023, other income primarily consisted of interest earned on cash.
Previous report — wording carried elsewhere
In the first half of 2024, due to ongoing weakness in lumber, pallet and biofuels markets in Europe stemming from high interest rates and other economic conditions, we recognized a non-cash goodwill impairment of $34.3 million related to the Torgau facility.
Previous report — wording carried elsewhere
Fiber costs were approximately 75% of our lumber cash production costs in the first half of 2024. In the first half of
Previous report — wording carried elsewhere
QUARTERLY REPORT - PAGE 40 are both highly cyclical. Higher fiber prices could affect producer profit margins if they are unable to pass along price increases to pulp and lumber customers or purchasers of surplus energy.