MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2026

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INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

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

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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INTERIM CONSOLIDATED BALANCE SHEETS

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INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

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INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

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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, 2025 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, 2025. 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, 2025 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.

Liquidity and Debt Covenants

As of March 31, 2026, the Company’s German subsidiaries that are borrowers under the German revolving credit facility did not meet the required leverage ratio thereunder. A waiver dated May 4, 2026, was received with respect to the leverage ratio covenant, effective through September 30, 2026. For additional disclosure, see Debt Note 5 (b).

Management currently believes that its existing cash balances, anticipated cash flows from operations and available capacity under its credit facilities will be sufficient to meet its liquidity requirements for at least the next 12 months from the issuance date of these financial statements. As of March 31, 2026, the Company had current assets of $834,752 and current liabilities of $384,776. These liabilities include the Canadian joint revolving credit facility, which matures in January 2027. Refinancing negotiations have begun for this facility and are expected to be completed before maturity. Alternatively, management currently believes that the Company maintains sufficient global liquidity to settle the amount due under the Canadian joint revolving credit facility, if necessary.

Management’s forecasts for covenant compliance and its ability to maintain access to capital distributions rely on various factors, including underlying market and operational estimates and assumptions. As actual results may vary, there can be no assurance that these forecasted outcomes will be realized. It is possible a change in these estimates and assumptions could impact future covenant compliance, which would materially impact the Company’s liquidity.

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 the Company’s debt covenant compliance and related debt classification and impairment testing for long-lived assets, depreciation and amortization, pension and other post-retirement benefit obligations, deferred income taxes (valuation allowance and permanent reinvestment), revenues under long-term contracts, inventory impairment, legal liabilities and contingencies. Actual results could differ materially from these estimates, and changes in these estimates are recorded when known.

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Accounting Pronouncements to be Adopted

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-03, which expands disclosures about specific expense categories presented on the face of the statement of operations and addresses requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, and depreciation and amortization) in commonly presented expense captions (such as cost of sales and 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. Supplemental Financial Statement Information

The following table reconciles cash, cash equivalents and restricted cash reported on the Interim Consolidated Balance Sheets to the total amount presented in the Interim Consolidated Statements of Cash Flows.

(a)

Restricted cash consists of deposits held as collateral for a standby letters of credit facility.

Note 3. Inventories

Inventories as of March 31, 2026 and December 31, 2025, were comprised of the following:

For the three months ended March 31, 2026, the Company recorded inventory impairment charges of$15,100 against raw materials inventory and$6,900 against finished goods inventory as a result of low pulp prices and high fiber costs. The inventory impairment charges are included in “Cost of sales, excluding depreciation and amortization” in the Interim Consolidated Statements of Operations.

For the three months ended March 31, 2025, there wereno inventory impairment charges recorded.

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Note 4. Accounts Payable and Other

Accounts payable and other as of March 31, 2026 and December 31, 2025, was comprised of the following:

(a)

Revenues recognized for the three months ended March 31, 2026 and 2025 from amounts recorded as deposits, advances or progress billings within “Accounts payable and other” at the beginning of each year were$11,209 and $3,865, respectively.

(b)

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 improved wastewater emissions.

Note 5. Debt

Debt as of March 31, 2026 and December 31, 2025, was comprised of the following:

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The maturities of the long-term principal portion of the senior notes and credit arrangements as of March 31, 2026 were as follows:

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, 2026, the Company was in compliance with the terms of its debt agreements with the exception of a financial covenant under its German joint revolving credit facility. Refer to (b) below for additional details.

(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 2029 Senior Notes can be redeemed at 100.00% of their principal amount. The following table presents the

redemption prices (expressed as percentages of principal amount) and the redemption periods of the 2028

Senior Notes:

(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% (increased to 2.50% to 4.25% in May 2026 in connection with the waiver described below) 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, 2026, approximately€175.0 million ($201,215) of this facility was drawn and accruing interest at a rate of 3.357% and approximately€15.6 million ($17,893) was supporting bank guarantees.

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Debt Covenants and Waiver

As of March 31, 2026, the Company’s German subsidiaries that are borrowers under the German revolving credit facility did not meet the required leverage ratio thereunder. A waiver dated May 4, 2026, was received with respect to the leverage ratio covenant for thefirst three quarters of 2026, such that the leverage ratio financial covenant will not be required to be tested until the Calculation Date (as defined in the German joint revolving credit facility) occurring on December 31, 2026 (and thereafter). Based on this waiver and management’s assessment of the probability of meeting the required leverage ratio and complying with other covenants at subsequent compliance dates within the next year, the amount due under this facility remains classified as non-current in the Interim Consolidated Balance Sheet. Under the terms of thewaiver, distributions to the parent entity are prohibited until September 30, 2026 (subject to limited exceptions). Additionally, certain covenants were modified, one of which limits facility utilization to €300.0 million while the leverage ratio exceeds 2.00:1.00. The waiver also provides for, among other things, modifications to the existing variable marginto a range of 2.50% to 4.25% depending on prescribed leverage ratios, andcreates additional events of default such as cross-defaults to certain of the Company’s other indebtedness, including the outstanding Senior Notes and Canadian joint revolving credit facility, and provides other ancillary lender protections. As of March 31, 2026, adjusting for the utilization limit, approximately€109.4 million ($125,832) was available for future draws. Non-compliance with the leverage ratio covenant addressed pursuant to the waiver did not and does not trigger any cross-default provisions under the Company’s other debt agreements.

(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 adesignated prime rate per annum; (ii)Canadian dollar denominated advances, which bear interest at the applicable Adjusted Term Canadian Overnight Repo Rate Average plus 1.20% to 1.45% per annum; (iii) dollar denominated base rate advances at the greater of thefederal 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 atthe applicable Adjusted Term SOFR plus 1.20% to 1.45% per annum. As of March 31, 2026, approximately C$131.5 million ($94,338) of this facility was drawn and accruing interest at a rate of 4.051%, approximately C$0.6 million ($462) was supporting letters of credit and approximately C$9.1 million ($6,550) 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 thethree-month Euribor plus 2.50%. As of March 31, 2026, approximately€2.6 million ($2,934) of this facility was supporting bank guarantees and approximately$nil was available.

(e)

In October 2025, the Company entered into a C$20.0 million revolving credit facility for the Celgar mill and Peace River mill that matures in August 2027. This facility is available through letters of credit denominated in Canadian dollars and dollars, which incur fees at the greater of 0.50% per annum of the face amount of the letter of credit or C$300. The facility and all letters of credit issued under the facility are guaranteed by Export Development Canada until August 2026. As of March 31, 2026, C$3.1 million ($2,200) of this facility was supporting letters of credit and approximately C$16.9 million ($12,148) was available.

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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 thethree months ended March 31, 2026 and 2025 were as follows:

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, 2026, the Company made contributions of $447 to this plan (2025 –$211).

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, 2026, the Company made contributions of $550 to this plan (2025 –$706).

Note 7. Income Taxes

The U.S. Federal statutory income tax rate and the Company’s effective income tax rate are as follows:

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The differences between the 21% U.S. Federal statutory rate and the effective income tax rates for thethree months ended March 31, 2026 and 2025, were driven by changes in valuation allowances, the tax benefit of a partnership structure, the effect of foreign earnings and adjustments to the estimated annual effective tax rate.

Note 8. Shareholders’ Equity

Stock Based Compensation

The Company’s stock incentive plan consists of stock options, restricted stock units, deferred stock units (“DSUs”), restricted shares, performance shares, performance share units (“PSUs”) and stock appreciation rights. During the three months ended March 31, 2026, there wereno issued and outstanding stock options, performance shares or stock appreciation rights. As of March 31, 2026, after factoring in all allocated shares and the forfeiture of 1.21 million PSUs during the three months ended March 31, 2026, there remain approximately 4.3 million common shares available for grant.

Note 9. Net Loss Per Common Share

The reconciliation of basic and dilutednet loss per common share for the three months ended March 31, 2026 and 2025 was as follows:

(a)

For the three months ended March 31, 2026, the weighted average number of common shares outstanding excludes 111,732 restricted shares which have been issued, but have not vested as of March 31, 2026 (2025 –21,054 restricted shares) and includes vested, equity-settled DSUs (“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. Non-vested instruments excluded from the calculation ofnet loss per common share because they were anti-dilutive for the three months ended March 31, 2026 and 2025 were as follows:

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Note 10. Accumulated Other Comprehensive Loss

The change in theaccumulated other comprehensive loss by component (net of tax) for the three months ended March 31, 2026 and 2025 was as follows:

Note 11. Related Party Transactions

For the three months ended March 31, 2026, services from the Company’s 20% owned logging and chipping operation were$2,395 (2025 –$2,969) and as of March 31, 2026, the Company had apayable balance to the operation of$439 (December 31, 2025 –receivable of$1,077).

For the three months ended March 31, 2026, services from the Company’s 26% owned wood purchasing operation were$1,353 (2025 –$2,229) and as of March 31, 2026, the Company had apayable balance to the operation of $643 (December 31, 2025 – $nil).

Note 12. Segment Information

The Company is managed based on the primary products it manufactures: pulp and solid wood, whose operating results are regularly reviewed by the Company’s chief operating decision maker (the “CODM”) to assess segment performance and to make decisions about resource allocation. The Company’s CODM is the Chief Executive Officer. Accordingly, the Company’sfour 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.

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.

The CODM uses net income (loss) before interest, tax, depreciation and amortization and impairments of long-lived assets (“Segment Operating EBITDA”) as the primary measure in its review of segment operating performance, using the measure to assess segment trends and identify strategies to improve the allocation of resources among the reportable segments.

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.

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Information about certain segment data for the three months ended March 31, 2026 and 2025 was as follows:

(a)

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

(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 include selling, general and administrative expenses, the net change in finished goods inventories and foreign exchange gains or losses on the revaluation of dollar denominated receivable balances.

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(a)

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

(b)

(c)

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

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(a)

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

(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 include selling, general and administrative expenses, the net change in finished goods inventories and foreign exchange gains or losses on the revaluation of dollar denominated receivable balances.

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(a)

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

(b)

(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, restricted cash, 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, 2026 and December 31, 2025 were as follows:

The carrying value of the revolving credit facilities classified as Level 2 approximates the fair value as the variable interest rates reflect current interest rates for financial instruments with similar characteristics and maturities.

The fair value of the senior notes classified as Level 2 was determined using quoted prices in a dealer market, or using recent market transactions. The Company’s senior notes are not carried at fair value in the Interim Consolidated Balance Sheets as of March 31, 2026 or December 31, 2025. However, fair value disclosure is required. The carrying value of the Company’s senior notes, net of unamortized note issuance costs, was$1,268,811 as of March 31, 2026 (December 31, 2025 –$1,268,252).

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Credit Risk

The Company’s exposure to credit losses may increase if its customers’ production and other costs are adversely affected by inflation, interest rate levels and tariffs. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables if the cash flows of the Company’s customers are adversely impacted by inflation, interest rate levels and tariffs. As of March 31, 2026, the Company has not had significant credit losses.

As of March 31, 2026, the carrying amount of cash and cash equivalents of$84,541, restricted cash of$5,000, and accounts receivable of$329,070 recorded in the Interim Consolidated Balance Sheet, net of any allowances for losses, represent the Company’s maximum exposure to credit risk.

Note 14. Commitments and Contingencies

(a)

The Company is involved in legal actions and claims arising in the ordinary course of business. While the outcome of any legal actions and claims cannot be predicted with certainty, it is the opinion of management that the outcome of any such claims which are pending or threatened, either individually or on a combined basis, will not have a material adverse effect on the consolidated financial condition, results of operations or liquidity of the Company.

(b)

The Company is subject to regulations that require the handling and disposal of asbestos in a prescribed manner if a property undergoes a major renovation or demolition. Otherwise, the Company is not required to remove asbestos from its facilities. Generally asbestos is found on steam and condensate piping systems as well as certain cladding on buildings and in building insulation throughout older facilities. The Company’s obligation for the proper removal and disposal of asbestos products from the Company’s mills is a conditional asset retirement obligation. As a result of the longevity of the Company’s mills, due in part to the maintenance procedures and the fact that the Company does not have plans for major changes that require the removal of asbestos, the timing of the asbestos removal is indeterminate. As a result, the Company is currently unable to reasonably estimate the fair value of its asbestos removal and disposal obligation. The Company will recognize a liability in the period in which sufficient information is available to reasonably estimate its fair value.

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NON-GAAP FINANCIAL MEASURES

This quarterly report on Form 10-Q contains “non-GAAP financial measures”, that is, financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measure calculated and presented in accordance with the generally accepted accounting principles in the United States, referred to as “GAAP”. Specifically, we make use of the non-GAAP financial measure “Operating EBITDA”.

We define Operating EBITDA as operating income (loss) plus depreciation and amortization and long-lived asset impairment charges.

We use Operating EBITDA as a benchmark measurement of our own operating results and as a benchmark relative to our competitors. We consider it to be a meaningful supplement to operating income (loss) as a performance measure primarily because depreciation expense and long-lived asset impairment charges are not actual cash costs, and depreciation expense varies widely from company to company in a manner that we consider largely independent of the underlying cost efficiency of our operating facilities. In addition, we believe Operating EBITDA is commonly used by securities analysts, investors and other interested parties to evaluate our financial performance.

Operating EBITDA does not reflect the impact of a number of items that affect our net income (loss), including financing costs, income taxes and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under GAAP, and should not be considered as an alternative to net income (loss) or operating income (loss) as a measure of performance, or as an alternative to net cash from (used in) operating activities as a measure of liquidity. Operating EBITDA is an internal measure and therefore may not be comparable to other companies.

Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that Operating EBITDA does not reflect: (i) our cash expenditures, or future requirements, for capital expenditures or contractual commitments; (ii) changes in, or cash requirements for, working capital needs; (iii) the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our outstanding debt; (iv) the impact of realized or marked-to-market changes in our derivative positions, which can be substantial; and (v) the impact of impairment charges against our investments or long-lived assets. Because of these limitations, Operating EBITDA should only be considered as a supplemental performance measure and should not be considered as a measure of liquidity or cash available to us to invest in the growth of our business. Because all companies do not calculate Operating EBITDA in the same manner, Operating EBITDA as calculated by us may differ from Operating EBITDA or EBITDA as calculated by other companies. We compensate for these limitations by using Operating EBITDA as a supplemental measure of our performance and by relying primarily on our GAAP financial statements.

Operating EBITDA is a non-GAAP financial measure at the consolidated level and is considered different from Operating EBITDA at the segment level, referred to as “Segment Operating EBITDA”, which is our single measure of segment profit or loss presented in our financial statements under GAAP. For more information on Segment Operating EBITDA, refer to the segment information note within our consolidated financial statements.

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