Mercer Int'l (MERC) Misses Q4 EPS by 46c, Revenues Beat

Mercer Int'l (NASDAQ: MERC) reported Q4 EPS of ($1.11), $0.46 worse than the analyst estimate of ($0.65). Revenue for the quarter came in at $331.17 million versus the consensus estimate of $315.03 million.

• 2019 Operating EBITDA of $210.4 million and net loss of $9.6 million
• Fourth quarter pulp segment annual maintenance downtime of 54 days significantly contributed to negative Operating EBITDA* of $34.2 million and a net loss of $72.7 million

Mr. David M. Gandossi, the Chief Executive Officer, stated: "Our fourth quarter results reflect significant annual maintenance activities in our pulp segment and weakness in the pulp markets. High producer inventories, particularly of hardwood pulp, resulted in pricing pressure on both hardwood and softwood. We believe that pricing for both pulps were bottoming going into 2020 and we expect that improving market conditions will support modest upward pricing pressure during 2020. However, there may be near-term headwinds on pulp prices and demand in China as a result of the current ongoing coronavirus outbreak. In the first quarter of 2020, we have three days of scheduled downtime at one of our pulp mills.

In the current quarter our wood segment benefitted from lower fiber costs which largely contributed to it achieving record quarterly operating income of $5.3 million."

Outlook

Going into 2020, we currently expect continued steady demand to improve markets over the year. Until recently, the combination of steady demand and falling inventories, along with the supply restrictions created by the shut of an NBSK mill in Nova Scotia and the industry strike in Finland was putting upward pressure on prices. However, the current ongoing coronavirus outbreak could create inland logistics restrictions or other disruptions that may, over time, begin to slow down paper manufacturing in China and put pressure on pulp pricing and demand. We are currently unable to determine the full impact at this time. We continue to closely monitor this developing situation.

We currently expect modestly higher lumber prices in the near term due to stronger demand in the U.S.

For earnings history and earnings-related data on Mercer Int'l (MERC) click here.

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