MERCER INTERNATIONAL INC.
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
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.
Jun 30, 2026 · Filed Aug 6, 2026
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 2026-03-31; filed 2026-05-07.
0001193125-26-212136
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001193125-26-338272
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 183 previous paragraphs and 240 current paragraphs.
103 unchanged; 60 reworded; 65 added; 17 removed; 3 previous and 12 current paragraphs rearranged.
Tables are not compared: 8 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 (65)
Current report
In the second quarter of 2026, our lumber sales realizations modestly increased compared to the first quarter of 2026, primarily due to low customer inventory levels and sawmill curtailments in the U.S. While supply also contracted in Europe, continued weak regional demand limited the positive impact on pricing in the market.
Current report
Total revenues for the second quarter of 2026 remained relatively steady at $460.3 million compared to $453.5 million in the same period of 2025, as higher sales realizations for our solid wood products and higher pulp sales volumes were mostly offset by lower pulp sales realizations.
Current report
Costs and expenses in the second quarter of 2026 were generally flat at $519.3 million compared to $511.9 million in the same period of 2025. In the second quarter of 2026, higher per unit fiber costs were mostly offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the second quarter of 2026, costs and expenses included a non-cash impairment of $29.0 million primarily against pulp and fiber inventory as a result of low pulp prices and high fiber costs. In the same period of 2025, costs and expenses included a non-cash impairment of $11.0 million against hardwood inventory at our Peace River mill.
Current report
In the second quarter of 2026, we had a positive foreign exchange impact of approximately $6.4 million on our operating loss compared to the same period of 2025. This positive impact was primarily due to the effect of a stronger dollar compared to the euro and Canadian dollar on the revaluation of dollar-denominated accounts receivable held at our operations as of June 30, 2026.
Current report
In the second quarter of 2026, our operating loss was $59.0 million compared to an operating loss of $58.4 million in the same period of 2025. In the second quarter of 2026, higher per unit fiber costs and lower pulp sales realizations were mostly offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the second quarter of 2026, our operating loss included a non-cash inventory impairment of $29.0 million compared to $11.0 million in the same period of 2025.
Current report
Interest expense increased by approximately 9% to $30.9 million in the second quarter of 2026 from $28.4 million in the same period of 2025. This increase was primarily driven by higher interest rates on borrowings under the German joint revolving credit facility (the “German Facility”), pursuant to the terms of the waiver obtained in the second quarter of 2026.
Current report
In the second quarter of 2026, Operating EBITDA was negative $21.0 million compared to negative $20.9 million in the same period of 2025. In the second quarter of 2026, higher per unit fiber costs and lower pulp sales realizations were mostly offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the second quarter of 2026, Operating EBITDA included a non-cash inventory impairment of $29.0 million compared to $11.0 million in the same period of 2025.
Current report
Strategic Initiatives
Current report
In July 2026, it was announced that the Torgau facility would be undertaking strategic actions designed to align its capacity and operational profile to current market conditions, which involve initiatives to streamline its organization and processes, along with adjustments to its product portfolio. These actions include an initial reduction of approximately 100 contractor positions in July 2026 and overall workforce reduction of approximately 350 positions to be completed in stages, and completing in or about the second quarter of 2027.
Current report
Pulp revenues in the second quarter of 2026 modestly decreased to $303.3 million from $313.7 million in the same period of 2025 as a result of lower sales realizations, partially offset by higher sales volume.
Current report
Total pulp production in the second quarter of 2026 was relatively flat at 455,769 ADMTs compared to 457,117 ADMTs in the same period of 2025. Our German pulp mills reduced production during the quarter in response to high fiber prices, but this was offset by there being no planned maintenance downtime in the second quarter of 2026 compared to 23 days (approximately 33,200 ADMTs) at our pulp mills in the same period of 2025. Pulp production at our German mills is expected to remain at reduced levels in the third quarter of 2026 due to ongoing high fiber costs.
Current report
In the third quarter of 2026, we currently expect a total of 40 days of planned annual maintenance downtime (approximately 42,600 ADMTs) at our pulp mills.
Current report
Total pulp sales volumes in the second quarter of 2026 increased by approximately 6% to 450,329 ADMTs from 426,731 ADMTs in the same period of 2025 driven by the timing of sales.
Current report
Our average NBSK pulp sales realizations in the second quarter of 2026 decreased by approximately 10% to $682 per ADMT from $758 per ADMT in the same period of 2025. This decrease was primarily due to lower pricing in North America and China, while higher list prices in Europe were offset by increased customer discounts. In the second quarter of 2026, average NBHK pulp sales realizations increased by approximately 6% to $607 per ADMT from $575 per ADMT in the same period of 2025, driven by higher prices in all our markets.
Current report
In the second quarter of 2026, we had a positive foreign exchange impact of approximately $7.8 million on Segment Operating EBITDA compared to the same period of 2025. This positive impact was primarily due to the effect of a stronger dollar compared to the euro and Canadian dollar on the revaluation of dollar-denominated accounts receivable held at our operations as of June 30, 2026.
Current report
In the second quarter of 2026, we recorded a non-cash inventory impairment of $26.0 million primarily as a result of low pulp prices and high fiber costs.
Current report
In the second quarter of 2026, costs and expenses modestly decreased to $362.9 million from $368.7 million in the same period of 2025. This decrease was primarily due to lower planned maintenance downtime, our cost reduction initiatives and the positive foreign exchange impact from a stronger dollar. These decreases were partially offset by higher per unit fiber costs and higher pulp sales volumes. In the second quarter of 2026, costs and expenses included a non-cash inventory impairment of $26.0 million compared to $11.0 million in the same period of 2025.
Current report
Overall average per unit fiber costs in the second quarter of 2026 increased by approximately 14% compared to the same period of 2025 primarily due to higher costs in Germany. These higher costs were driven by reduced supply, and strong demand for wood as an energy source as a result of ongoing geopolitical conflicts. For the third quarter of 2026, per unit fiber costs for our German pulp mills are expected to slightly increase due to continued strong demand. For our Canadian pulp mills, per unit fiber costs are expected to modestly decrease as supply improves.
Current report
Transportation costs for our pulp segment in the second quarter of 2026 increased by approximately 14% to $37.4 million from $32.9 million in the same period of 2025, driven by higher sales volumes.
Current report
In the second quarter of 2026, Segment Operating EBITDA for our pulp segment was negative $12.7 million compared to negative $10.3 million in the same period of 2025. This decrease primarily resulted from lower pulp sales realizations and higher per unit fiber costs. These adverse effects were partially offset by the impact of lower planned maintenance downtime, the benefits of our cost reduction initiatives, and the positive foreign exchange impact from a stronger dollar. In the second quarter of 2026, Segment Operating EBITDA included a non-cash inventory impairment of $26.0 million compared to $11.0 million in the same period of 2025.
Current report
In the second quarter of 2026, lumber revenues decreased by approximately 15% to $56.6 million from $66.3 million in the same period of 2025 as a result of lower sales volumes.
Current report
In the second quarter of 2026, manufactured products revenues were $25.8 million compared to $12.4 million in the same period of 2025. This increase was primarily driven by higher sales volumes and realizations.
Current report
Pallet revenues in the second quarter of 2026 increased by approximately 20% to $31.9 million from $26.6 million in the same period of 2025 due to higher sales realizations and volumes.
Current report
Biofuels, energy and wood residuals revenues in the second quarter of 2026 increased by approximately 66% to $19.8 million from $11.9 million in the same period of 2025 due to higher sales realizations and higher sales volumes.
Current report
Lumber production in the second quarter of 2026 was relatively stable at 123.8 MMfbm compared to 120.2 MMfbm in the same period of 2025.
Current report
Lumber sales volumes in the second quarter of 2026 decreased by approximately 17% to 100.3 MMfbm from 120.6 MMfbm in the same period of 2025 driven by the timing of sales.
Current report
Average lumber sales realizations in the second quarter of 2026 modestly increased to $565 per Mfbm from $550 per Mfbm in the same period of 2025. This increase was primarily due to lower customer inventory levels in the U.S. The U.S. market accounted for approximately 49% of our lumber revenues and approximately 43% of our lumber sales volumes in the second quarter of 2026. The balance of our lumber sales were mainly to Europe.
Current report
In the second quarter of 2026, we recorded a non-cash inventory impairment of $3.0 million as a result of high fiber costs in Germany.
Current report
QUARTERLY REPORT - PAGE 34 fiber costs to modestly decrease as sawlog availability improves.
Current report
Transportation costs for our solid wood segment in the second quarter of 2026 increased by approximately 21% to $16.2 million from $13.4 million in the same period of 2025 primarily as a result of higher freight rates.
Current report
Consolidated – Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Current report
Total revenues for the first half of 2026 were relatively flat at $949.6 million compared to $960.5 million in the same period of 2025.
Current report
Selling, general and administrative expenses were flat at $60.1 million in the first half of 2026 and the same period of 2025.
Current report
Interest expense in the first half of 2026 increased by approximately 6% to $60.0 million from $56.6 million in the same period of 2025. This increase was primarily driven by higher borrowings under our revolving credit facilities and higher interest rates on borrowings under the German Facility, pursuant to the terms of the waiver obtained in the second quarter of 2026.
Current report
In the first half of 2026, our net loss was $128.0 million, or $1.91 per share, compared to $108.4 million, or $1.62 per share, in the same period of 2025.
Current report
Pulp Segment– Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Current report
Energy and chemical revenues in the first half of 2026 increased by approximately 11% to $47.5 million from $42.7 million in the same period of 2025, primarily due to higher sales realizations.
Current report
Total pulp sales volumes in the first half of 2026 modestly increased to 921,029 ADMTs from 904,610 ADMTs in the same period of 2025, due to the timing of sales.
Current report
In the first half of 2026, the third-party industry quoted average list price in North America and net price in China for NBHK pulp both increased from the same period of 2025, primarily due to global supply constraints. The third-party industry quoted average list price for NBHK pulp in North America was approximately $1,417 per ADMT in the first half of 2026 compared to approximately $1,289 per ADMT in the same period of 2025. The third-party industry quoted average net price for NBHK pulp in China was approximately $598 per ADMT in the first half of 2026 compared to approximately $556 per ADMT in the same period of 2025.
Current report
In the first half of 2026, we recorded inventory impairment charges of $48.0 million primarily as a result of low pulp prices and high fiber costs. In the first half of 2025, we recorded inventory impairment charges of $11.0 million primarily as a result of low hardwood pulp prices.
Showing the first 40 of 65 passages. Open the source sections for the rest.
Removed paragraphs (17)
Previous report
In the first quarter of 2026, our lumber sales realizations were relatively stable in both the U.S. and Europe compared to the fourth quarter of 2025.
Previous report
Manufactured products primarily include CLT and glulam.
Previous report
Interest expense in the first quarter of 2026 was relatively steady at $29.1 million compared to $28.2 million in the same period of 2025.
Previous report
Selected Financial Information
Previous report
Energy and chemical revenues in the first quarter of 2026 were relatively stable at $25.8 million compared to $24.1 million in the same period of 2025.
Previous report
There is currently no annual maintenance downtime planned for our pulp mills in the second quarter of 2026.
Previous report
Pulp sales volumes in the first quarter of 2026 were relatively steady at 470,700 ADMTs compared to 477,879 ADMTs in the same period of 2025, consistent with the relatively flat production.
Previous report
In the first quarter of 2026, we recorded a non-cash inventory impairment of $22.0 million as a result of low pulp prices and high fiber costs.
Previous report
Transportation costs for our pulp segment in the first quarter of 2026 were relatively flat at $36.8 million compared to $35.4 million in the same period of 2025.
Previous report
Selected Financial Information
Previous report
Manufactured products primarily include CLT and glulam.
Previous report
Pallet revenues in the first quarter of 2026 increased by approximately 29% to $29.9 million from $23.2 million in the
Previous report
QUARTERLY REPORT - PAGE 26 same period of 2025 primarily due to higher sales volumes.
Previous report
Lumber sales volumes in the first quarter of 2026 decreased by approximately 14% to 112.1 MMfbm from 130.9 MMfbm in the same period of 2025 as a result of lower production.
Previous report
The Canadian joint revolving credit facility matures in January 2027 and is, therefore, classified as a current liability. Refinancing negotiations have begun for this facility and are expected to be completed before maturity. However, there can be no assurance such existing maturity will be extended, or other refinancings or related initiatives will be completed on acceptable terms, or at all. Alternatively, management currently believes that the Company maintains sufficient global liquidity to settle the obligation, if necessary. Management’s forecasts for 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, and it is possible a change in these estimates and assumptions could materially impact our liquidity.
Previous report
Based upon the current level of operations and our current expectations for future periods in light of the current economic environment, and in particular, current and expected pulp and lumber pricing, foreign exchange rates and our ability to complete refinancings of existing indebtedness, we believe that cash flow from operations and available cash, together with available borrowings under our revolving credit facilities and access to capital markets, will be adequate to finance the capital requirements for our business for the next 12 months.
Previous report
QUARTERLY REPORT - PAGE 29 returning to compliance by the fourth quarter of 2026, driven by targeted cost reductions, cyclical cash flow improvements, and stabilizing market conditions. In accordance with the Waiver and our 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 a non-current liability as of March 31, 2026.
Reworded paragraphs (60)
Previous wording
The following discussion and analysis of our results of operations and financial condition for the three months ended March 31, 2026 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, 2025 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 six months ended June 30, 2026 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, 2025 filed with the Securities and Exchange Commission, referred to as the “SEC”.
Previous wording
In the first quarter of 2026, our NBSK pulp sales realization was relatively steady compared to the fourth quarter of 2025. While European third-party published list prices increased, this was offset by higher discounts. The Chinese market continued to be pressured by an oversupplied paper sector and weak demand linked to economic and trade uncertainties. Similarly, North American prices were tempered by excess regional inventory. Conversely, our NBHK pulp sales realizations increased as a result of higher prices driven by stronger demand and lower inventory levels.
Current wording
In the second quarter of 2026, our NBSK pulp sales realizations were relatively steady compared to the first quarter of 2026. In Europe, third-party list prices held flat as weak demand was offset by scheduled maintenance and curtailments. Similarly, North American third-party published list prices remained flat, with excess regional supply offsetting improving demand. The Chinese market continued to be pressured by an oversupplied paper sector and weak demand linked to prevailing economic and trade uncertainties. Conversely, our NBHK pulp sales realizations increased. This was driven by higher prices in North America, which benefited from global supply constraints, lower inventory levels, and steady demand. However, prices in China were flat as continued regional overcapacity offset the impact of global supply constraints.
Previous wording
As of March 31, 2026, the third-party industry quoted NBSK pulp list prices in Europe and North America were approximately $1,655 per ADMT and $1,590 per ADMT, respectively, and the third-party industry quoted NBSK pulp net price in China was approximately $675 per ADMT. Prices for China are net of discounts, allowances and rebates.
Current wording
As of June 30, 2026, the third-party industry quoted NBSK pulp list prices in Europe and North America were approximately $1,655 per ADMT and $1,570 per ADMT, respectively, and the third-party industry quoted NBSK
Previous wording
In the second quarter of 2026, we currently expect NBSK pulp prices to modestly increase in all our markets and NBHK pulp prices to be relatively steady.
Current wording
In the third quarter of 2026, we currently expect NBSK pulp prices to modestly decrease in all our markets as reduced supply is offset by lower seasonal demand. Conversely, we currently expect NBHK pulp prices to modestly decrease as global supply constraints ease.
Previous wording
In the second quarter of 2026, we currently expect lumber prices to remain stable in Europe and modestly increase in the U.S. due to lower supply. In the second quarter of 2026, we anticipate pallet prices to remain flat due to continued weak economic conditions in Europe and mass timber prices to remain relatively steady.
Current wording
In the third quarter of 2026, we currently expect lumber prices to remain stable in Europe as weak demand is offset by reduced supply, and modestly increase in the U.S. due to lower customer inventory levels and capacity curtailments. During the same period, we anticipate pallet prices to remain flat due to continued weak economic conditions in Europe and mass timber prices to remain relatively steady.
Previous wording
Per unit fiber costs for the pulp and solid wood segments increased in the first quarter of 2026 compared to the fourth quarter of 2025 driven by supply constraints and strong demand. For the second quarter of 2026, we currently expect per unit fiber costs to stabilize as improved availability is offset by strong demand.
Current wording
Per unit fiber costs for the pulp and solid wood segments increased in the second quarter of 2026 compared to the first quarter of 2026, driven by supply constraints and strong demand in Germany. For the third quarter of 2026, per unit fiber costs are expected to remain elevated at our German mills with a slight increase at our pulp mills. This increase is driven by continued strong demand for wood as an energy source as a result of ongoing geopolitical conflicts. For our sawmills and Canadian pulp mills, per unit fiber costs are expected to modestly decrease as regional curtailments improve their fiber supply.
Previous wording
Operating EBITDA is a non-GAAP measure. See “Non-GAAP Financial Measures” for its description, limitations and why we consider it to be a useful measure. The following table provides a reconciliation of net loss to operating income (loss) and Operating EBITDA for the periods indicated:
Current wording
Operating EBITDA is a non-GAAP measure. See “Non-GAAP Financial Measures” for its description, limitations and why we consider it to be a useful measure. The following table provides a reconciliation of net loss to operating loss and Operating EBITDA for the periods indicated:
Previous wording
Selling, general and administrative expenses were relatively flat at $28.5 million in the first quarter of 2026 compared to $29.7 million in the same period of 2025.
Current wording
Selling, general and administrative expenses were relatively steady at $31.6 million in the second quarter of 2026 compared to $30.4 million in the same period of 2025.
Previous wording
In the first quarter of 2026, other income was $1.8 million compared to other expenses of $0.2 million in the same period of 2025. Other income in the first quarter of 2026 primarily consisted of interest earned on cash. In the same period of 2025, other expenses primarily consisted of foreign exchange losses on dollar denominated cash held at our operations as the dollar weakened against the euro at the end of the period mostly offset by interest earned on cash in the quarter.
Current wording
In the second quarter of 2026, other income was $0.5 million compared to other expenses of $1.1 million in the same period of 2025. Other income in the second quarter of 2026 primarily consisted of interest earned on cash. In the same period of 2025, other expenses primarily consisted of foreign exchange losses on the revaluation of dollar-denominated cash held at our operations as the dollar weakened against the euro at the end of the period, mostly offset by interest earned on cash in the quarter.
Previous wording
In the first quarter of 2026, our net loss was $52.0 million, or $0.78 per share, compared to $22.3 million, or $0.33 per share in the same period of 2025.
Current wording
In the second quarter of 2026, our net loss was $76.0 million, or $1.13 per share, compared to $86.1 million, or $1.29 per share, in the same period of 2025.
Previous wording
Total revenues for the first quarter of 2026 decreased by approximately 3% to $489.3 million from $507.0 million in the same period of 2025. This decrease was primarily due to lower pulp sales realizations partially offset by modestly higher sales realizations from our other products.
Current wording
Energy and chemical revenues in the second quarter of 2026 increased by approximately 17% to $21.7 million from $18.6 million in the same period of 2025. This increase was primarily due to higher sales realizations, partially offset by lower sales volumes.
Previous wording
In the first quarter of 2026, the third-party industry quoted average list price for NBHK pulp in North America and the third-party industry quoted average net price for NBHK pulp in China modestly increased from the same period of 2025 primarily due to global supply constraints. The third-party industry quoted average list price for NBHK pulp in North America was approximately $1,338 per ADMT in the first quarter of 2026 compared to approximately $1,268 per ADMT in the same period of 2025. The third-party industry quoted average net price for NBHK pulp in China was approximately $595 per ADMT in the first quarter of 2026 compared to approximately $578 per ADMT in the same period of 2025.
Current wording
In the second quarter of 2026, the third-party industry quoted average list price in North America and net price in China for NBHK pulp both increased from the same period of 2025, primarily due to global supply constraints. The third-party industry quoted average list price for NBHK pulp in North America was approximately $1,495 per ADMT in the second quarter of 2026 compared to approximately $1,310 per ADMT in the same period of 2025. The third-party industry quoted average net price for NBHK pulp in China was approximately $602 per ADMT in the second quarter of 2026 compared to approximately $533 per ADMT in the same period of 2025.
Previous wording
Solid wood segment revenues in the first quarter of 2026 increased by approximately 7% to $131.7 million from $122.7 million in the same period of 2025 as a result of higher revenue from all product categories except for lumber.
Current wording
Solid wood segment revenues in the second quarter of 2026 increased by approximately 14% to $134.2 million from $117.3 million in the same period of 2025 as a result of higher revenue from all product categories except for lumber.
Previous wording
Manufactured products sales realizations decreased by approximately 36% to $1,801 per m 3 in the first quarter of 2026 from $2,832 per m 3 in the same period of 2025 as construction activity was weighted toward modest-scale projects amid an elevated interest rate environment in the U.S.
Current wording
Manufactured products sales realizations increased by approximately 67% to $2,206 per m 3 in the second quarter of 2026 from $1,318 per m 3 in the same period of 2025 driven by a shift in mass timber construction activity toward higher-value projects.
Previous wording
Fiber costs were approximately 85% of our lumber cash production costs in the first quarter of 2026. In the first quarter of 2026, per unit fiber costs for lumber production increased by approximately 36% compared to the same period of 2025 due to reduced supply and strong demand. For the second quarter of 2026, we currently expect per unit fiber costs to be flat as the positive impact of improved supply will be offset by strong demand.
Current wording
Fiber costs were approximately 85% of our lumber cash production costs in the second quarter of 2026. In the second quarter of 2026, per unit fiber costs for lumber production increased by approximately 28% compared to the same period of 2025 due to reduced supply and strong demand. For the third quarter of 2026, we currently expect per unit
Previous wording
In the first quarter of 2026, Segment Operating EBITDA for the solid wood segment was negative $5.6 million compared to negative $0.3 million in the same period of 2025. This primarily resulted from higher per unit fiber costs partially offset by modestly higher sales realizations for most of our products.
Current wording
In the second quarter of 2026, Segment Operating EBITDA for the solid wood segment was negative $8.2 million compared to negative $4.9 million in the same period of 2025. This decrease primarily resulted from higher per unit fiber costs partially offset by higher sales realizations for all our products.
Previous wording
Costs and expenses in the first quarter of 2026 increased by approximately 4% to $522.2 million from $500.2 million in the same period of 2025. This increase was primarily due to the negative foreign exchange impact from a weaker dollar on our euro and Canadian dollar denominated costs and expenses and higher per unit fiber costs partially offset by lower maintenance costs. In the first quarter of 2026, costs and expenses included a non-cash inventory impairment charge of $22.0 million against pulp and fiber inventory as a result of low pulp prices and high fiber costs.
Current wording
Costs and expenses in the first half of 2026 modestly increased to $1,041.4 million from $1,012.2 million in the same period of 2025. This increase was primarily due to the higher per unit fiber costs and the negative foreign exchange impact from a weaker dollar on our euro and Canadian dollar-denominated costs and expenses. These adverse impacts were partially offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the first half of 2026, costs and expenses included inventory impairment charges of $51.0 million primarily against pulp and fiber inventory as a result of low pulp prices and high fiber costs. In the same period of 2025, costs and expenses included inventory impairment charges of $11.0 million against hardwood inventory at our Peace River mill.
Previous wording
In the first quarter of 2026, cost of sales depreciation and amortization was relatively steady at $40.7 million compared to $40.3 million in the same period of 2025.
Current wording
In the first half of 2026, cost of sales depreciation and amortization was relatively steady at $78.6 million compared to $77.7 million in the same period of 2025.
Previous wording
In the first quarter of 2026, we had a negative foreign exchange impact of approximately $21.5 million on our operating loss compared to the same period of 2025. This negative impact was primarily due to the effect of a weaker dollar on our euro and Canadian dollar denominated costs and expenses.
Current wording
In the first half of 2026, we had a negative foreign exchange impact of approximately $15.7 million on our operating loss compared to the same period of 2025. This negative impact was primarily due to the effect of a weaker dollar on our euro and Canadian dollar-denominated costs and expenses.
Previous wording
In the first quarter of 2026, our operating loss was $32.9 million compared to an operating income of $6.7 million in the same period of 2025. This decrease was primarily due to lower pulp sales realizations, higher per unit fiber costs and the negative foreign exchange impact from a weaker dollar partially offset by lower maintenance costs. In the first quarter of 2026, our operating loss also included a non-cash inventory impairment charge of $22.0 million.
Current wording
In the first half of 2026, our operating loss was $91.9 million compared to $51.7 million in the same period of 2025. This increase in operating loss was primarily due to lower pulp sales realizations and higher per unit fiber costs, partially offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the first half of 2026, our operating loss also included inventory impairment charges of $51.0 million compared to $11.0 million in the same period of 2025.
Previous wording
During the first quarter of 2026, we had an income tax recovery of $8.2 million, or an effective tax rate of 14%, and in the same period of 2025, we had an income tax provision of $0.7 million on a loss before income tax of $21.6 million. 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.
Current wording
During the first half of 2026, we had an income tax recovery of $21.6 million, or an effective tax rate of 14%, and in the same period of 2025, we had an income tax recovery of $1.1 million, or an effective tax rate of 1%. 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 from which we do not expect to realize a tax benefit.
Previous wording
In the first quarter of 2026, Operating EBITDA decreased to $7.8 million from $47.1 million in the same period of 2025. This decrease primarily resulted from lower pulp sales realizations, higher per unit fiber costs, and the negative foreign exchange impact from a weaker dollar partially offset by lower maintenance costs. In the first quarter of 2026, our Operating EBITDA also included a non-cash inventory impairment charge of $22.0 million.
Current wording
In the first half of 2026, Operating EBITDA decreased to negative $13.1 million from positive $26.2 million in the same period of 2025. This decrease primarily resulted from lower pulp sales realizations and higher per unit fiber costs, partially offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the first half of 2026, Operating EBITDA also included inventory impairment charges of $51.0 million compared to $11.0 million in the same period of 2025.
Previous wording
Pulp segment revenues, comprised of pulp, energy and chemical revenues, in the first quarter of 2026 decreased by approximately 9% to $345.0 million from $381.1 million in the same period of 2025 driven by lower pulp revenues.
Current wording
Pulp segment revenues, comprised of pulp, energy and chemical revenues, in the first half of 2026 decreased by approximately 6% to $670.1 million from $713.4 million in the same period of 2025 due to lower pulp revenues.
Previous wording
Pulp revenues in the first quarter of 2026 decreased by approximately 11% to $319.2 million from $357.0 million in the same period of 2025 primarily as a result of lower sales realizations.
Current wording
Pulp revenues in the first half of 2026 decreased by approximately 7% to $622.5 million from $670.7 million in the same period of 2025, primarily as a result of lower sales realizations.
Previous wording
Total pulp production in the first quarter of 2026 was relatively flat at 465,717 ADMTs compared to 458,909 ADMTs in the same period of 2025. There was no planned maintenance downtime in the first quarter of 2026, compared to 22 days (approximately 29,700 ADMTs) at our Celgar mill in the same period of 2025. This benefit was mostly offset by the impact of reduced production at our German mills due to fiber supply constraints in Europe.
Current wording
Total pulp production in the first half of 2026 was relatively flat at 921,486 ADMTs compared to 916,026 ADMTs in the same period of 2025. Our German pulp mills reduced production in the first half of 2026 in response to high fiber prices, but this was mostly offset by there being no planned maintenance downtime in the first half of 2026 compared to 45 days (approximately 62,900 ADMTs) at our pulp mills in the same period of 2025.
Previous wording
In the first quarter of 2026, the third-party industry quoted average list price for NBSK pulp in Europe modestly increased compared to the same period of 2025 primarily due to supply constraints. In the first quarter of 2026, the third-party industry quoted average list price for NBSK pulp in North America and the third-party industry quoted average net price for NBSK pulp in China decreased compared to the same period of 2025. The decrease was primarily due to weak demand driven by the current economic climate and, in China, an oversupplied paper market. Third-party industry quoted average list prices for NBSK pulp in Europe and North America were approximately $1,618 per ADMT and $1,563 per ADMT, respectively, in the first quarter of 2026 compared to approximately $1,550 per ADMT and $1,753 per ADMT, respectively, in the same period of 2025. The third-party industry quoted average net price for NBSK pulp in China was approximately $685 per ADMT in the first quarter of 2026 compared to approximately $793 per ADMT in the same period of 2025. 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 first half of 2026, the third-party industry quoted average list price for NBSK pulp in Europe increased compared to the same period of 2025 primarily due to supply constraints. In the first half of 2026, the third-party industry quoted average list price in North America and net price in China for NBSK pulp both decreased compared to the same period of 2025. The decrease was primarily due to weak demand driven by the current economic climate and, in China, an oversupplied paper market. Third-party industry quoted average list prices for NBSK pulp in Europe and North America were approximately $1,637 per ADMT and $1,570 per ADMT, respectively, in the first half of 2026 compared to approximately $1,552 per ADMT and $1,787 per ADMT, respectively, in the same period of 2025. The third-party industry quoted average net price for NBSK pulp in China was approximately $672 per ADMT in the first half of 2026 compared to approximately $764 per ADMT in the same period of 2025. 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 first quarter of 2026 decreased by approximately 11% to $696 per ADMT from $783 per ADMT in the same period of 2025 due to lower prices in North America and China. In the first quarter of 2026, average NBHK pulp sales realizations remained flat at $564 per ADMT compared to $570 per ADMT in the same period of 2025.
Current wording
Our average NBSK pulp sales realizations in the first half of 2026 decreased by approximately 11% to $689 per ADMT from $771 per ADMT in the same period of 2025 due to lower prices in North America and China, and higher discounts in Europe. In the first half of 2026, average NBHK pulp sales realizations were relatively flat at $585 per ADMT compared to $572 per ADMT in the same period of 2025.
Previous wording
In the first quarter of 2026, we had a negative foreign exchange impact of approximately $15.7 million on Segment Operating EBITDA compared to the same period of 2025 primarily due to the effect of a weaker dollar on our euro and Canadian dollar denominated costs and expenses.
Current wording
In the first half of 2026, we had a negative foreign exchange impact of approximately $8.6 million on Segment Operating EBITDA compared to the same period of 2025, primarily due to the effect of a weaker dollar on our euro- and Canadian-dollar-denominated costs and expenses.
Previous wording
Costs and expenses in the first quarter of 2026 remained stable at $366.9 million compared to $360.9 million in the same period of 2025 as higher per unit fiber costs and the negative foreign exchange impact from a weaker dollar on our euro and Canadian dollar denominated costs and expenses were partially offset by lower maintenance costs. In the first quarter of 2026, costs and expenses included a non-cash inventory impairment charge of $22.0 million against inventory as a result of low pulp prices and high fiber costs.
Current wording
Costs and expenses in the first half of 2026 remained flat at $729.8 million compared to $729.6 million in the same period of 2025 as higher per unit fiber costs, the negative foreign exchange impact from a weaker dollar, and higher pulp sales volumes were mostly offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the first half of 2026, costs and expenses included an inventory impairment charge of $48.0 million compared to $11.0 million in the same period of 2025.
Previous wording
Overall average per unit fiber costs in the first quarter of 2026 increased by approximately 22% compared to the same period of 2025 primarily as a result of reduced supply in Germany and Canada. For the second quarter of 2026, we currently expect per unit fiber costs to stabilize as improved availability is offset by strong demand.
Current wording
Overall average per unit fiber costs in the first half of 2026 increased by approximately 18% compared to the same period of 2025, primarily due to reduced supply in Germany and Canada, as well as strong demand for wood as an energy source in Germany.
Previous wording
In the first quarter of 2026, Segment Operating EBITDA for the pulp segment decreased to $6.9 million from $49.9 million in the same period of 2025. This decrease primarily resulted from lower pulp sales realizations, higher per unit fiber costs, and the negative foreign exchange impact from a weaker dollar partially offset by lower maintenance costs. In the first quarter of 2026, Segment Operating EBITDA also included a non-cash inventory impairment of $22.0 million.
Current wording
In the first half of 2026, Segment Operating EBITDA for the pulp segment decreased to negative $5.8 million from positive $39.6 million in the same period of 2025. This decrease primarily resulted from lower pulp sales realizations, higher per unit fiber costs and the negative foreign exchange impact from a weaker dollar. These adverse effects were partially offset by the impact of lower planned maintenance downtime and the benefits of our cost reduction initiatives. In the first half of 2026, Segment Operating EBITDA also included inventory impairment charges of $48.0 million compared to $11.0 million in the same period of 2025.
Previous wording
Lumber revenues in the first quarter of 2026 decreased by approximately 8% to $60.1 million from $65.4 million in the same period of 2025 primarily due to lower sales volumes.
Current wording
Lumber revenues in the first half of 2026 decreased by approximately 11% to $116.7 million from $131.7 million in the same period of 2025 due to lower sales volumes.
Previous wording
In the first quarter of 2026, manufactured products revenues increased by approximately 12% to $21.0 million from $18.8 million in the same period of 2025 primarily due to higher sales volumes partially offset by lower sales realizations.
Current wording
In the first half of 2026, manufactured products revenues increased by approximately 50% to $46.9 million from $31.2 million in the same period of 2025 due to higher sales volumes.
Previous wording
Biofuels, energy and wood residuals revenues in the first quarter of 2026 increased by approximately 36% to $20.8 million from $15.3 million in the same period of 2025 primarily as a result of higher sales realizations for wood residuals and biofuels.
Current wording
Biofuels, energy and wood residuals revenues in the first half of 2026 increased by approximately 49% to $40.6 million from $27.3 million in the same period of 2025 as a result of higher sales realizations and volumes.
Previous wording
Lumber production in the first quarter of 2026 decreased by approximately 9% to 115.9 MMfbm from 128.0 MMfbm in the same period of 2025 due to fiber supply constraints.
Current wording
Lumber production in the first half of 2026 modestly decreased to 239.8 MMfbm from 248.2 MMfbm in the same period of 2025 due to fiber supply constraints.
Previous wording
Average lumber sales realizations in the first quarter of 2026 increased by approximately 7% to $536 per Mfbm from $499 per Mfbm in the same period of 2025 primarily as a result of lower supply and higher fiber costs in the European market. This increase was partially offset by lower average sales realization in the U.S. market due to weak demand. The U.S. market accounted for approximately 46% of our lumber revenues and approximately 42% of our lumber sales volumes in the first quarter of 2026. The balance of our lumber sales was mainly to Europe.
Current wording
Average lumber sales realizations in the first half of 2026 increased by approximately 5% to $549 per Mfbm from $524 per Mfbm in the same period of 2025. This increase was primarily due to higher prices in Germany in response to higher fiber costs. Prices in the U.S. market were flat. The U.S. market accounted for approximately 47% of our lumber revenues and approximately 42% of our lumber sales volumes in the first half of 2026. The balance of our lumber sales was mainly to Europe.
Previous wording
Transportation costs for our solid wood segment in the first quarter of 2026 increased by approximately 12% to $14.9 million from $13.3 million in the same period of 2025 as a result of higher freight rates.
Current wording
Transportation costs for our solid wood segment in the first half of 2026 increased by approximately 16% to $31.1 million from $26.7 million in the same period of 2025 as a result of higher freight rates.
Previous wording
We operate in a cyclical industry and our operating cash flows vary accordingly. Our principal operating cash expenditures are for production costs, such as fiber, chemicals and energy costs, and other material operating costs for maintenance, freight and labor. Historically, we have met our liquidity needs principally from cash on hand, cash flow from operations, and, if needed, external borrowings, including borrowings under revolving credit facilities and issuances of debt securities.
Current wording
We operate in a cyclical industry and our operating cash flows vary accordingly. Our principal operating cash expenditures are for production costs, such as fiber, chemicals, and energy costs, and other material operating costs for maintenance, freight, and labor. Historically, we have met our liquidity needs principally from cash on hand, cash flow from operations, and, if needed, external borrowings, including borrowings under revolving credit facilities and issuances of debt securities. However, ongoing market pressures continue to impact our liquidity. For additional details, see Note 1 to our consolidated financial statements and “Sources and Uses of Funds – Going Concern”.
Previous wording
Cash Flows from (used in) Operating Activities. In the three months ended March 31, 2026, cash used in operating activities was $85.7 million compared to $3.0 million in the same period of 2025. An increase in accounts receivable used cash of $32.0 million in the three months ended March 31, 2026 and $16.8 million in the same period of 2025. Adjusting for inventory impairments of $22.0 million, an increase in inventories used cash of $35.1 million in the three months ended March 31, 2026 and $6.9 million in the same period of 2025. An increase in accounts payable and accrued expenses provided cash of $12.7 million in the three months ended March 31, 2026 and $28.4 million in the same period of 2025. An increase in prepaid expenses and other used cash of $29.8 million in the three months ended March 31, 2026, primarily related to prepaid interest payments on our senior notes due 2028, and $27.5 million in the same period of 2025.
Current wording
Cash Flows from (used in) Operating Activities. In the six months ended June 30, 2026, cash used in operating activities was $100.8 million compared to $7.5 million in the same period of 2025. An increase in accounts receivable used cash of $13.5 million in the six months ended June 30, 2026, and a decrease in accounts receivable provided cash of $14.8 million in the same period of 2025. Adjusting for inventory impairments of $51.0 million, an increase in inventories used cash of $81.7 million in the six months ended June 30, 2026. Adjusting for inventory impairments of $11.0 million, an increase in inventories used cash of $24.1 million in the same period of 2025. An increase in accounts payable and accrued expenses provided cash of $12.6 million in the six months ended June 30, 2026 and $16.4 million in the same period of 2025. A decrease in prepaid expenses and other provided cash of $4.6 million in the six months ended June 30, 2026. An increase in prepaid expenses and other used cash of $8.8 million in the same period of 2025.
Previous wording
Cash Flows from (used in) Investing Activities. In the three months ended March 31, 2026, investing activities used cash of $12.8 million. In the three months ended March 31, 2026, we incurred $13.2 million of capital expenditures primarily related to lime kiln improvement and other strategic projects at our Stendal mill and maintenance projects across all mills and facilities.
Current wording
Cash Flows from (used in) Investing Activities. In the six months ended June 30, 2026, investing activities used cash of $19.3 million. In the six months ended June 30, 2026, we incurred $25.3 million of capital expenditures primarily related to lime kiln improvement and other strategic projects at our Stendal mill, upgrades to the digester evaporator
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Rearranged current paragraphs (12)
Current report — wording carried from elsewhere
QUARTERLY REPORT - PAGE 27 pulp net price in China was approximately $645 per ADMT. Prices for China are net of discounts, allowances and rebates.
Current report — wording carried from elsewhere
In the second quarter of 2026, cost of sales depreciation and amortization was relatively flat at $37.9 million compared to $37.5 million in the same period of 2025.
Current report — wording carried from elsewhere
In the second quarter of 2026, we had an income tax recovery of $13.4 million, or an effective tax rate of 15%, and in the same period of 2025, we had an income tax recovery of $1.9 million, or an effective tax rate of 2%. 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 from which we do not expect to realize a tax benefit.
Current report — wording carried from elsewhere
Pulp segment revenues, comprised of pulp, energy and chemical revenues, in the second quarter of 2026 modestly decreased to $325.1 million from $332.3 million in the same period of 2025 due to lower pulp revenues.
Current report — wording carried from elsewhere
In the second quarter of 2026, the third-party industry quoted average list price for NBSK pulp in Europe increased from the same period of 2025 primarily due to supply constraints. In the second quarter of 2026, the third-party industry quoted average list price in North America and net price in China for NBSK pulp both decreased compared to the same period of 2025. The decrease was primarily due to weak demand driven by the current economic climate and, in China, an oversupplied paper market. Third-party industry quoted average list prices for NBSK pulp in Europe and North America were approximately $1,655 per ADMT and $1,577 per ADMT, respectively, in the second quarter of 2026, compared to approximately $1,553 per ADMT and $1,820 per ADMT, respectively, in the same period of 2025. The third-party industry quoted average net price for NBSK pulp in China was approximately $658 per ADMT in the second quarter of 2026 compared to approximately $734 per ADMT in the same period of 2025. 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 report — wording carried from elsewhere
In the first half of 2026, other income was $2.3 million compared to other expenses of $1.3 million in the same period of 2025. Other income in the first half of 2026 primarily consisted of interest earned on cash. In the same period of 2025, other expenses primarily consisted of foreign exchange losses on dollar-denominated cash held at our operations as the dollar weakened against the euro at the end of the period, mostly offset by interest earned on cash.
Current report — wording carried from elsewhere
Segment Operating EBITDA is a measure of segment profit or loss presented in our financial statements under GAAP. Refer to the segment information note in our consolidated financial statements for more information.
Current report — wording carried from elsewhere
Segment Operating EBITDA is a measure of segment profit or loss presented in our financial statements under GAAP. Refer to the segment information note in our consolidated financial statements for more information.
Current report — wording carried from elsewhere
Solid wood segment revenues in the first half of 2026 increased by approximately 11% to $265.9 million from $240.0 million in the same period of 2025 as a result of higher revenue from all product categories except for lumber.
Current report — wording carried from elsewhere
Fiber costs were approximately 85% of our lumber cash production costs in the first half of 2026. During this period, per unit fiber costs for lumber production increased by approximately 32% compared to the same period of 2025 due to reduced supply and strong demand.
Current report — wording carried from elsewhere
Pursuant to the Waiver, the lenders under our German Facility waived the requirement to comply with the leverage ratio financial covenant for the first three fiscal quarters of 2026. The Waiver also modified certain covenants, including limiting utilization of the German Facility to €300 million while the leverage ratio exceeds 2.00:1.00, limiting drawdown requests for incremental borrowings to €20 million (until certain liquidity forecasts are provided),
Current report — wording carried from elsewhere
QUARTERLY REPORT - PAGE 46 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 (3)
Previous report — wording carried elsewhere
Our other debt agreements remain in compliance and this Waiver does not trigger any cross-default provisions under those agreements.
Previous report — wording carried elsewhere
QUARTERLY REPORT - PAGE 33 time but generally reflect changes in macroeconomic conditions and levels of industry capacity. Pulp and lumber are commodities that are generally available from other producers. Because commodity products have few distinguishing qualities from producer to producer, competition is generally based upon price, which is primarily determined by supply relative to demand.
Previous report — wording carried elsewhere
We have manufacturing operations in Germany, Canada and the U.S. Most of the operating costs and expenses of our German mills are incurred in euros and those of our Canadian mills in Canadian dollars. However, the majority of our sales are in products quoted in dollars. Our results of operations and financial condition are reported in dollars. As a