MERCER INTERNATIONAL INC.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2026

QUARTERLY REPORT - PAGE 2

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

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

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

QUARTERLY REPORT - PAGE 3

INTERIM CONSOLIDATED BALANCE SHEETS

QUARTERLY REPORT - PAGE 4

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

QUARTERLY REPORT - PAGE 5

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

QUARTERLY REPORT - PAGE 6

Note 1. The Company, Subsequent Events, Going Concern and Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

The interim consolidated financial statements contained herein (the “Interim Consolidated Financial Statements”) 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.

Prepackaged Restructuring Pursuant to Restructuring Support Agreements

Mercer and one non-operating subsidiary of Mercer (each, a “Company Party”) intend to implement a comprehensive restructuring of the Company’s debt obligations and capital structure (the “Restructuring”) in accordance with the Restructuring Support Agreements (as defined below) with holders of (i)(a) approximately 85.3% of the aggregate outstanding principal amount of Mercer’s 12.875% Senior Notes due 2028 (the “2028 Senior Notes”) and (b) approximately 88.2% of the aggregate outstanding principal amount of Mercer’s 5.125% Senior Notes due 2029 (the “2029 Senior Notes” and, together with the 2028 Senior Notes, the “Senior Notes”), and (ii) approximately 50% of Mercer’s aggregate common stock (the “Existing Equity Interests”), pursuant to which such holders have committed, among other things, to vote in favor of the Plan (as defined below). The Restructuring is expected to be effectuated through a joint prepackaged plan of reorganization (the “Plan”) of Mercer and one non-operating subsidiary (the Company Parties that commence such cases, collectively, the “Debtors”) under voluntary cases (the “Chapter 11 Cases”) to be commenced under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code” and such chapter, “chapter 11”) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”). The Company does not expect any operational impact from the Restructuring and plans to continue to operate its business as usual and to serve customers and pay vendors and employees in the ordinary course of business, with the Debtors operating as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Company expects to complete the Restructuring by the end of calendar year 2026. Mercer’s operating subsidiaries will not commence chapter 11 cases and will continue to operate their businesses as usual and in the ordinary course.

On November 2, 2026, the Company Parties entered into (i) a Restructuring Support Agreement with certain holders, or investment advisors, sub-advisors, or managers for the accounts of beneficial holders or beneficial holders, which such accounts or beneficial holders such investment advisors, sub-advisors, or managers have authority to bind or direct, of Senior Notes (collectively, the “Consenting Senior Noteholders”) and (ii) a Restructuring Support Agreement with materially similar terms with certain holders, or investment advisors, sub-advisors, or managers for

QUARTERLY REPORT - PAGE 7 the accounts of beneficial holders or beneficial holders, which such accounts or beneficial holders such investment advisors, sub-advisors, or managers have authority to bind or direct, of Existing Equity Interests (collectively, the “Consenting Equityholders” and, together with the Consenting Senior Noteholders, the “Consenting Stakeholders”) (in each case, together with all exhibits and schedules thereto, including the restructuring term sheet attached in each case thereto, and together, the “Restructuring Support Agreements” or “RSAs”).

As of the date of the RSAs, the Consenting Senior Noteholders hold, own, or control approximately 87% of the aggregate outstanding principal amount of the Senior Notes and the Consenting Equityholders hold, own, or control approximately 50% of the aggregate outstanding amount of Existing Equity Interests.

Pursuant to the RSAs, holders of Senior Notes are expected to receive, among other things, their pro rata share of takeback senior secured notes,91.5% of new common stock and 56.5% of new convertible preferred stock (each subject to dilution), and the right to participate in a fully backstopped rights offering of $420,000 (inclusive of $20,000 of original issue discount but exclusive of a put option premium) of new senior secured notes. Holders of Existing Equity Interests are expected to receive their pro rata share of 8.5% of new common stock and 3.5% of new convertible preferred stock (each subject to dilution). General unsecured creditors are expected to be unimpaired under the Plan. Refer to the Debt Note for additional information.

Going Concern

These Interim Consolidated Financial Statements have been prepared in accordance with GAAP assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business within one year from the issuance of these Interim Consolidated Financial Statements.

The Company’s ability to continue as a going concern depends on executing the Plan and emerging from bankruptcy, which remain subject to Bankruptcy Court confirmation, among other conditions. Management currently believes the Company will be able to emerge from bankruptcy and continue to operate as a viable going concern thereafter. However, management can provide no assurance that the Plan will be confirmed by the Bankruptcy Court and the transactions contemplated by the RSAs will be consummated. Due to the inherent uncertainties of the chapter 11 process and securing court confirmation, substantial doubt exists about the Company’s ability to continue as a going concern for the one-year period from the issuance of these Interim Consolidated Financial Statements. As of September 30, 2026, the Company retains sufficient liquidity to meet its obligations to customers, vendors, counterparties, and employees in the ordinary course of business, with approximately $71,007 of unrestricted cash and $72,524 of available capacity under its credit facilities. If the Plan is not confirmed or consummated, the Company may be required to pursue alternative restructuring transactions on less favorable terms, which could include a non-prepackaged chapter 11 case or liquidation.

The Interim Consolidated Financial Statements do not include any adjustments, which could be material, to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.

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, the Company’s ability to continue as a going concern, 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.

QUARTERLY REPORT - PAGE 8

Accounting Pronouncements to be Adopted

Disaggregation of Income Statement Expenses

In November 2024, the Financial Accounting Standards Board (“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.

Government Grants

In December 2025, the FASB issued ASU 2025-10, which establishes authoritative guidance on the recognition, measurement and presentation of government grants received by business entities. The new guidance leverages existing principles used in practice, makes targeted improvements and modifies existing disclosure requirements. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028, and interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact of ASU 2025-10.

Environmental Credits and Environmental Credit Obligations

In May 2026, the FASB issued ASU 2026-02, which establishes a new accounting framework for the recognition, measurement, presentation and disclosure of environmental credits and environmental credit obligations. Under the new standard, an entity recognizes and measures environmental credit assets based on their intended use as well as how the credits are obtained. Environmental credit obligations are recognized and measured depending on whether an entity holds or expects to use environmental credits to settle that obligation. ASU 2026-02 is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact of ASU 2026-02.

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 letter of credit facility.

Note 3. Government Grants

In August 2026, the Company was awarded C$18.1 million in non-repayable grants to be applied against eligible projects and operational costs of the Peace River mill. For the three and nine months ended September 30, 2026, C$18.1 million ($12,968) was recognized as a reduction to “Cost of sales, excluding depreciation and amortization” in the Interim Consolidated Statements of Operations as there was reasonable assurance that the conditions for the receipt were met and that the grants will be received. As of September 30, 2026, the eligible costs have been incurred and approximately C$11.0 million ($7,882) has been received, with the remaining C$7.1 million ($5,086) received in October 2026.

QUARTERLY REPORT - PAGE 9

Note 4. Inventories

Inventories as of September 30, 2026 and December 31, 2025, were comprised of the following:

For the three and nine months ended September 30, 2026, the Company recorded inventory impairment charges of$8,000 and$59,000, respectively, as a result of low pulp prices and high fiber costs. As of September 30, 2026,$4,500 of the write-down was recorded against raw materials inventory and$3,500 was recorded against finished goods inventory. The inventory impairment charges are included in “Cost of sales, excluding depreciation and amortization” in the Interim Consolidated Statements of Operations.

For the three and nine months ended September 30, 2025, the Company recorded inventory impairment charges of $20,400 and $31,400, respectively, primarily as a result of low pulp prices.

Note 5. Accounts Payable and Other

Accounts payable and other as of September 30, 2026 and December 31, 2025, was comprised of the following:

(a)

Revenues recognized for the nine months ended September 30, 2026 and 2025 from amounts recorded as deposits, advances or progress billings within “Accounts payable and other” at the beginning of each year were$16,434 and$4,345, 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.

QUARTERLY REPORT - PAGE 10

Note 6. Debt

Debt as of September 30, 2026 and December 31, 2025, was comprised of the following:

The maturities of the principal portion ofdebt as of September 30, 2026 were as follows:

As of September 30, 2026, the Company was in compliance with the terms of its debt agreements with the exception of a financial covenant under its German Facility, which non-compliance has been waived during the applicable waiver period. Refer to (b) below for additional details.

QUARTERLY REPORT - PAGE 11

(a)

On November 2, 2026, the Company Parties entered into RSAs with Consenting Stakeholders. The following is a summary of the material terms of the transactions contemplated by the RSAs that impact the Company’s capital structure:

•

New money rights offering: Holders of Senior Notes will have the right to purchase their pro rata share of $420,000 aggregate principal amount of new senior secured notes (the “New Money Senior Secured Notes”), inclusive of $20,000 of original issue discount, for aggregate cash proceeds of $400,000 subject to the terms of the RSAs (the “Rights Offering”). Each participant in the Rights Offering that exercises its rights will also receive their pro rata share of 40.0% of the new common stock and 40.0% of the new convertible preferred stock.

•

Full backstop: The Rights Offering is fully backstopped by certain members of an ad hoc group of noteholders, subject to the terms of a backstop commitment letter.

•

Senior Notes: Holders of Senior Notes will receive their pro rata share of (i)91.5% of the new common stock (subject to dilution by the management incentive plan, the new common stock issued in the Rights Offering, and the conversion of the new convertible preferred stock), (ii)56.5% of the new convertible preferred stock, (iii) $150,000 of new takeback senior secured notes and (iv) the rights to participate in the Rights Offering.

•

New senior secured notes: The New Money Senior Secured Notes, as well as $150,000 of takeback notes and $56,000 of put option notes, will (i) be issued under a single new indenture, (ii) mature four years and 364 days after issuance and (iii) have no scheduled amortization. For the first two years after issuance, the Company may elect to pay interest substantially in kind.

•

Existing shareholders: Holders of existing common stock will receive their pro rata share of 8.5% of the new common stock and 3.5% of the new convertible preferred stock, in each case subject to dilution only by the management incentive plan and conversion of the new convertible preferred stock. Existing common stock will be cancelled when the plan of reorganization becomes effective.

•

New convertible preferred stock: The reorganized Company will issue $325,000 of new convertible preferred stock, with dividends payable in kind and convertible into new common stock, on the terms set out in the RSAs.

In connection with the RSAs, on the effective date of the Plan, the reorganized Company will enter into a new asset-based revolving credit facility, which may be implemented through a global facility or one or more regional facilities (the “New ABL Facility”), in an aggregate principal amount of up to $300,000, reduced by the principal amount the lenders under the Canadian Facility agree to reinstate, extend or provide under a new or amended facility. The Company Parties will use best efforts to negotiate an amendment to the credit agreement governing the Canadian Facility extending its maturity by five years (the “Canadian Facility Amendment”), although neither the execution nor the consummation of the Canadian Facility Amendment is a condition to the Restructuring. Subject to any Canadian Facility Amendment, indebtedness under the Canadian Facility will be reduced by at least $41,000 on the effective date of the Plan. The German Facility will be repaid in full and terminated, and any outstanding letters of credit thereunder will be either transferred to the New ABL Facility or cash collateralized. The €2.6 million demand loan facility and the C$13.0 million standby letter of credit facility are expected to remain unchanged and outstanding or to receive such other treatment as is reasonably agreed to by the Company Parties, the required Consenting Senior Noteholders and the holder of the applicable facility.

As previously announced, the Company elected not to make the approximately $25,800 interest payment due October 1, 2026 on the 2028 Senior Notes and instead elected to utilize the 30-day grace period provided under the indenture governing the 2028 Senior Notes, the use of which did not constitute an event of default under the indenture. On October 30, 2026, following receipt of consents from holders of at least a majority in aggregate principal amount of the outstanding 2028 Senior Notes, the Company entered into a Second Supplemental Indenture with Computershare Trust Company, N.A., as trustee, to the indenture governing the 2028 Senior Notes, which amends Section 6.01(1) of such indenture to extend the grace period for the payment of interest due on the 2028 Senior Notes from 30 calendar days to 90 calendar days.

QUARTERLY REPORT - PAGE 12

(b)

As of September 30, 2026, approximately€235.9 million ($267,837) of this facility was drawn and accruing interest at a rate of 6.55% and approximately€21.3 million ($24,158) was supporting bank guarantees.

Debt Covenants and Waiver

As of March 31, 2026, the Company’s German subsidiaries that are borrowers under the German Facility did not meet the required leverage ratio thereunder. A waiver dated May 4, 2026, was received with respect to the leverage ratio financial covenant for thefirst three quarters of 2026, such that the leverage ratio financial covenant will not be required to be tested with respect to any quarter until the quarter ending December 31, 2026 (and thereafter), following the expiration of the existing waiver. Under the terms of thewaiver, distributions to the parent entity were 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, a grant of security over certain assets, and creates additional events of default such as cross-defaults to certain of the Company’s other indebtedness, including the outstanding Senior Notes and Canadian Facility, and provides other ancillary lender protections.

As of September 30, 2026, adjusting for the utilization limit, approximately€42.8 million ($48,655) was available for future draws. While non-compliance with the leverage ratio financial covenant addressed pursuant to the waiver did not and does not trigger any cross-default provisions under the Company’s Senior Notes or Canadian Facility, an unwaived breach with respect to the quarter ending December 31, 2026 could lead to a default and subsequent cross-defaults if the lenders under the German Facility exercise their acceleration rights. To address these default risks and liquidity requirements, the Company entered into the RSAs to implement a prepackaged financial restructuringas described under (a) above, under which the German Facility will be repaid in full and terminated on the effective date of the Plan.

(c)

As of September 30, 2026, approximately C$103.0 million ($72,594) of this facility was drawn and accruing interest at a rate of 4.04%, approximately C$0.6 million ($426) was supporting letters of credit and approximately C$23.9 million ($16,907) was available.

(d)

As of September 30, 2026, approximately€2.6 million ($2,898) of this facility was supporting bank guarantees and approximately$nil was available.

(e)

In September 2026, the total borrowing capacity on the facility was reduced from C$20.0 million to C$13.0 million following an amendment to the facility agreement. As of September 30, 2026, C$3.1 million ($2,200) of this facility was supporting letters of credit and approximately C$9.9 million ($6,962) was available.

(f)

In August 2026, the Company entered into an agreement with the government relating to the Peace River mill, under which the Company is eligible to receive up to C$19.0 million in repayable contributions as qualifying project expenditures are incurred and claimed. Monthly repayments are scheduled to commence on April 1, 2031 and end on March 1, 2036. Contributions received under this agreement bear interest at the average bank rate plus 3.0%, compounding monthly. As of September 30, 2026, the Company had received C$8.4 million ($5,910) with approximately C$10.6 million ($7,481) remaining available to claim as eligible costs are incurred.

QUARTERLY REPORT - PAGE 13

Note 7. 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 and nine months ended September 30, 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 defined contribution plan. During the three and nine months ended September 30, 2026, the Company made contributions of $331 and$1,113, respectively, to this plan (2025 –$348 and$961).

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 and nine months ended September 30, 2026, the Company made contributions of $536 and$1,714, respectively, to this plan (2025 –$582 and$1,971).

QUARTERLY REPORT - PAGE 14

Note 8. Income Taxes

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

The differences between the 21% U.S. Federal statutory rate and the effective income tax rates for thethree and nine months ended September 30, 2026, were driven by changes in valuation allowances, the effect of foreign earnings and the tax benefit of a partnership structure.

Note 9. Shareholders’ Equity

Stock-Based Compensation

The Company’s stock incentive plan consists of stock options, restricted stock units (“RSUs”), deferred stock units (“DSUs”), restricted shares, performance shares, performance share units (“PSUs”) and stock appreciation rights. During thethree and nine months ended September 30, 2026, there wereno issued and outstanding stock options, performance shares or stock appreciation rights. As of September 30, 2026, after factoring in all allocated shares, there remain approximately 3.2 million common shares available for grant.

The following table summarizes non-vested PSU activity during the period:

The following table summarizes non-vested restricted share, RSU and DSU activity during the period:

There were 228,667 equity-settled DSUs (“Equity DSUs”) and 137,709 cash-settled DSUs (“Cash Only DSUs”) granted to directors that were vested but not settled as of September 30, 2026.

QUARTERLY REPORT - PAGE 15

Note 10. Net Loss Per Common Share

The reconciliation of basic and dilutednet loss per common share for the three and nine months ended September 30, 2026 and 2025 was as follows:

(a)

For the three and nine months ended September 30, 2026, the weighted average number of common shares outstanding excludes 25,000 restricted shares which have been issued, but have not vested as of September 30, 2026 (2025 –111,732 restricted shares) and includes vested Equity DSUs.

The calculation of diluted net loss per common share does not assume the exercise of any instruments that would have an anti-dilutive effect on net loss per common share. Non-vested instruments excluded from the calculation ofnet loss per common share because they were anti-dilutive for the three and nine months ended September 30, 2026 and 2025 were as follows:

QUARTERLY REPORT - PAGE 16

Note 11. Accumulated Other Comprehensive Loss

The change in theaccumulated other comprehensive loss by component (net of tax) for the three and nine months ended September 30, 2026 and 2025 was as follows:

Note 12. Related Party Transactions

For the three and nine months ended September 30, 2026, services from the Company’s 20% owned logging and chipping operation were$1,660 and$4,651, respectively (2025 –$1,863 and$5,637) and as of September 30, 2026, the Company had apayable balance to the operation of$220 (December 31, 2025 –receivable of$1,077).

For the three and nine months ended September 30, 2026, services from the Company’s 26% owned wood purchasing operation were$5,279 and$10,571, respectively, (2025 –$2,750 and$8,412) and as of September 30, 2026, the Company had apayable balance to the operation of$242 (December 31, 2025 – $nil).

The Company maintains a commercial surety bond facility to support its mass timber project bidding and contract performance requirements with an entity owned by a major shareholder of the Company. Under the terms of the arrangement, the Company pays standard commercial premiums to the entity upon the issuance of any surety bonds. As of September 30, 2026, the facility provided up to $30,000 in total bonding capacity of which a nominal portion was utilized.

QUARTERLY REPORT - PAGE 17

Note 13. 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.

QUARTERLY REPORT - PAGE 18

Information about certain segment data for the three and nine months ended September 30, 2026 and 2025 was as follows:

(a)

(b)

(c)

(d)

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

QUARTERLY REPORT - PAGE 19

(a)

(b)

(c)

QUARTERLY REPORT - PAGE 20

(a)

(b)

(c)

(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.

QUARTERLY REPORT - PAGE 21

(a)

(b)

(c)

QUARTERLY REPORT - PAGE 22

(a)

(b)

(c)

(d)

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

QUARTERLY REPORT - PAGE 23

(a)

(b)

(c)

QUARTERLY REPORT - PAGE 24

(a)

(b)

(c)

(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.

QUARTERLY REPORT - PAGE 25

(a)

(b)

(c)

Note 14. 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 approximate their fair value. The estimated fair values of the Company’s outstanding debt under the fair value hierarchy as of September 30, 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 their variable interest rates, combined with the underlying collateral, reflect current market terms for similar secured instruments.

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 September 30, 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$1,269,929 as of September 30, 2026 (December 31, 2025 –$1,268,252).

QUARTERLY REPORT - PAGE 26

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 September 30, 2026, the Company has not had significant credit losses.

As of September 30, 2026, the carrying amount of cash and cash equivalents of$71,007, restricted cash of$5,000, and accounts receivable of$282,143 recorded in the Interim Consolidated Balance Sheet, net of any allowances for losses, represent the Company’s maximum exposure to credit risk.

Note 15. 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.

QUARTERLY REPORT - PAGE 27

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.

QUARTERLY REPORT - PAGE 28