Slides
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Mercer International Inc. Transforming biomass into bioproducts for a more sustainable world Q3 2025 Earnings Call November 7th, 2025 Juan Carlos Bueno – President & CEO Richard Short – CFO, Executive VP & Secretary
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Forward-looking Statements The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this presentation contains statements that are forward-looking, such as statements relating to results of operations and financial conditions, market expectations and business development activities, as well as capital spending and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of Mercer. For more information regarding these risks and uncertainties, review Mercer’s filings with the United States Securities and Exchange Commission. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. 2
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Financial Results Overview 3 EBITDA (US$ millions) Q2 2025 Q3 2025 Change (+/-) Pulp Segment(1) ($10) ($13) ($3) Solid Wood Segment(1) ($5) ($9) ($4) Corporate & Other ($6) ($6) - Operating EBITDA(2) ($21) ($28) ($7) Key DriversEBITDA Decreased Quarter-Over-Quarter Note: Due to rounding, numbers presented in this presentation may not add up precisely to totals and percentages may not precisely reflect the absolute figure. 1) 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. 2) Operating EBITDA is a non-GAAP measure. For a reconciliation of Net Loss to Operating EBITDA, refer to slide 24. • EBITDA decreased quarter-over-quarter due to: • Persistent global trade uncertainties suppressing pulp demand and pricing; • High fiber costs; and • Lower sales realizations for NBSK and NBHK pulp negatively impacted EBITDA by ~$15 million. • Lower sales realizations was the primary driver of a non-cash inventory impairment of $20 million in Q3.
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Pulp Prices 4 Region Q2 2025 Q3 2025 NBSK List Price (US$ / tonne) Domestic $1,820 $1,700 China (net) $734 $690 Europe $1,553 $1,497 NBHK List Price (US$ / tonne) Domestic $1,310 $1,203 China (net)(1) $533 $503 NBSK / NBHK Price Gap (US$ / tonne) China $201 $187 - $200 $400 $600 $800 $1,000 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2025 NBHK NBSK Pulp Segment Realized Pulp Price (US$ / tonne) Realized Prices Decreased in Q3Pricing Overview 1) Bleached eucalyptus kraft Lower pulp prices primary driver of a $20MM non-cash inventory impairment, of which ~$15MM was related to NBHK
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Production Volume (000s tonnes) Key Performance Indicators 5 Major Maintenance Downtime (Days) 23 20 6 Q2 2025 Q3 2025 Planned Start-up Pulp Segment Sales Volume (000s tonnes) 427 453 Q2 2025 Q3 2025 1) Adjusted production adds back lost tonnes from planned downtime 457 459490 480 Q2 2025 Q3 2025 Production (Actual) Production (Adjusted)(1) Q4 2025: • 18 days (Stendal)
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Lumber Overview Lumber Operations (mmfbm) Benchmark Lumber Price 120 115121 110 Q2 2025 Q3 2025 Production Sales Solid Wood Segment - $300 $600 $900 $1,200 $1,500 2021 2022 2023 2024 2025 Random Lengths WSPF 2&btr 2x4 (US$ / mfbm) 6
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Electricity and Mass Timber Mass Timber Revenue (US$mm)Electricity $90 $106 Q2 2025 Q3 2025 Price ($ / MWh) $11 $11 Q2 2025 Q3 2025 Despite headwinds our mass timber business has a healthy order book; we expect improved results in 2026 7 216 204 Q2 2025 Q3 2025 Sales Volume (GWh)
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Financial Position 8 Summary One Goal, One Hundred US$mm unless otherwise stated Measure Q2 2025 Q3 2025 Change (+/-) Net Loss ($86) ($81) ($5) Loss per Share ($1.29 / share) ($1.21 / share) ($0.08 / share) Cash flows Cash flow used in operating activities ($5) ($30) ($25) Capital expenditures ($24) ($30) ($6) Liquidity Position $438 $376 ($62) Cash $146 $98 ($48) Undrawn Revolvers $292 $278 ($14) • Goal to improve profitability by $100 million by the end of 2026, using 2024 as a baseline • $30 million in cost savings anticipated for 2025 • On track to meet goal Key Points • $13 million increase in cash consumption primarily driven by lower EBITDA • $6 million increase in capital expenditures primarily driven by maintenance, but also includes upgrades to our log yards at Friesau and Torgau
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Headwinds Trade Uncertainty • Operating results were negatively impacted by trade uncertainty, dampening both paper and lumber demand Pulp Pricing Pressure • Chinese overcapacity and cheap hardwood are driving grade substitution, putting downward pressure on both hardwood and softwood pulp prices Currency Impact • U.S. dollar weakness, driven by trade disputes, resulted in an $11 million increase in operating costs in Q3 compared to Q2 9 Internal Focus Focusing on controllable factors: mill reliability is beginning to yield tangible improvements and cost control initiatives are gaining traction
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Strategic Focus: One Goal, One Hundred 10 $100 million • On track to meet goals in 2025 and 2026 through savings programs and unlocking significant reliability improvements • Targeting $100 million in EBITDA improvements by the end of 2026 compared to 2024 • Initiative also includes targeting ~$20 million reduction in working capital and ~$20 million reduction in capital expenditures • Expecting to realize $30 million in reliability related savings for 2025
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Macroeconomic Headwinds: Tariffs & Fiber Supply 11 Increased Visibility on Tariff Impacts U.S. Section 232 review subjects both Canadian and European lumber to a 10% incremental tariff (average duty + tariff impact on Canadian lumber is now ~50%) Anticipated Canadian lumber curtailments driven by these duties will reduce residual chip supply, creating upward pressure on fiber costs Pulp shipments from Canada to the U.S. are not impacted by tariffs as they are CUSMA compliant Strategic Position & Mitigation • Celgar is strategically positioned to mitigate fiber cost pressure due to existing access to the U.S. fiber market and its capability to harvest and process whole logs • Peace River’s hardwood supply is not impacted by tariffs • Primary U.S. import (wood chips for Celgar, representing ~45% of its fiber) is currently not subject to counter- tariffs
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Pulp Markets Current State 12 Short-term Outlook Longer-term Outlook • Pulp markets weakened significantly due to seasonality-driven weak demand and low fiber costs in China • Market dynamics have created opportunistic pulp substitution by paper producers as they run their machines slower • Pulp de-stocking by paper producers is putting additional pressure on pulp prices • Expected upward pressure on pulp prices in late Q4 and early Q1 2026 as: • However, trade uncertainty is expected to linger likely keeping commodity prices subdued • Optimistic that once trade uncertainty subsides, markets will normalize and re-stocking effect will occur Announced European NBSK curtailments impact Chinese port stock; and Impact of delisting low-grade Russian pulp from Shanghai futures exchange is realized
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Expected incremental lumber production at Torgau will provide ~65 million board feet of annual lumber capacity beginning in Q4 4% decrease in lumber production compared to Q2 due to planned maintenance at Friesau Lumber Production 13 120 115 Q2 2025 Q3 2025 Quarterly Lumber Production (mmfbm) (4%)
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Fiber Costs 14 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '24 Q1 '25 Q2 '25 Q3 '25 Pulp Solid Wood Fiber Costs Increased for Pulp and Lumber Per Unit Fiber Costs Meaningful fiber cost increases are anticipated in Q4 for our operating segments. Pulp segment will be impacted by reduced sawmill residual availability and, for our German pulp mills, increased competition for wood chips from biofuel producers Overall pulp fibre costs relatively flat compared to Q2. In Germany, reduced demand for pulp logs reduced fibre costs. In Canada, costs increased due to higher logistics costs.
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Solid Wood Segment 15 Segment continues to be held back by weak European economy Persistent high interest rates on construction Negative $9MM segment EBITDA for Q3 with higher U.S. lumber pricing not offsetting the sustained weak demand for pallets Segment Headwinds Remained Consistent with Q2
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Lumber Markets • While U.S. lumber pricing may remain volatile in the short term, significantly higher anti-dumping and countervailing duties is expected to force production curtailments and drive an increase in lumber prices • European lumber prices trending upwards, driven by increasing saw log prices • Long-term price improvement in both markets reliant on economic recovery and interest rate reductions • Cost competitive configuration at Friesau gives us flexibility to maintain strong presence in Europe and the U.S., while also serving the quality-sensitive Japanese market We continue optimizing our mix of lumber products and customers to current market conditions Sawmill Curtailments Low Housing Stock Constructive Homeowner Demographics Mid-Term Drivers of Positive Supply-Demand Dynamics 16
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Pallets & Pellets 17 • Shipping pallet market remains weak due to overhang of European economy (especially Germany) • Once signs of economic recovery show, pallet prices expected to return to normal level • A $1/pallet increase, or ~10%, will put the pallet business into a positive cash flow position • Heating pellet prices remained relatively flat in Q3 • Expect demand and prices to be slightly higher in Q4 due to increased seasonal demand combined with supply concerns Pallet Pellet
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Mass Timber 18 • Steady growth in incoming project inquiries for the mass timber business, with potential sales volumes of these inquiries exceeding $400 million and over 100 projects per quarter • Order book is growing, with projects being bid on and won today scheduled for construction about nine months from now, well into 2026 • Revenue will pick up momentum in Q4, leading to a plan to ramp one facility to two shifts early next year • Mass Timber backlog of projects currently sits at ~$80 million ~30% of North American CLT capacity Broad range of product offerings Large geographic footprint Competitive across entire North American Market
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Capital Allocation 19 • Project will increase annual sawn timber production capacity by 100,000 m3 of dimensional lumber • Will increase value-added product mix and maximize potential synergies • Wood room upgrade expected to provide incremental fiber flexibility, reduced costs, and increased yield Strategic and high-return capital projects at Torgau and Celgar mills are recently completed • Total Q3 capex of ~$30 million • Expected 2025 capex of ~$100 million • Continued prioritization of maintenance of business, environmental, and safety capex • Expect 2026 capex to be meaningful lower than the 2025 spend Capital Expenditure Summary
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Bioproducts for a More Sustainable World 20 Carbon Capture Plant • Currently in FEL-2 stage of assessing the installation of a carbon capture plant. • Exciting opportunity to enter the voluntary carbon credit market We believe products like lignin, mass timber, green energy, lumber, and pulp will play increasingly important roles in displacing carbon-intensive products
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2025 Outlook 21 Aggressive Cost- Reduction Programs Strong Mill Reliability Ongoing and continued measures to support our liquidity position • Given the disappointing Q3 results and persistent industry headwinds, further measures are being implemented to improve liquidity position, including reductions in cost, capex, and working capital • Strong asset portfolio and experienced management team are well-positioned to navigate the downturn • Long-term strategic plan to transform pulp mills into biorefineries will introduce additional revenue streams, balance the product mix, and build greater resilience during future pulp market downturns Rebalancing Portfolio of Assets Capex and Working Capital Reductions
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Mercer International Inc. P: +1 (604) 684 1099 info@mercerint.com Suite 1120, 700 West Pender St Vancouver, B.C. Canada V6C 1G8 Contact Information www.mercerint.com
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23 Consolidated (US$ millions) Q2 2025 Q3 2025 Net loss ($86.1) ($80.8) Income tax recovery (1.9) (14.8) Interest expense 28.4 28.5 Other expense (income) 1.1 (0.5) Operating loss (58.4) (67.6) Add: Depreciation and amortization 37.5 39.5 Operating EBITDA (20.9) (28.2) Note: See next slide for additional disclosures Reconciling Net Loss to Operating EBITDA
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Reconciling Net Loss to Operating EBITDA 24 Note: For other reconciliations of Net Loss to Operating EBITDA in periods not shown, please refer to that period’s respective Form 10-Q or 10-K, which can be found on our website (www.mercerint.com) Operating EBITDA is defined as operating 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 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 underlyingcost 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 loss, including financing costs, incometaxes, 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 loss or operating 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 assets. Because of these limitations, Operating EBITDA should only be considered as a supplemental performance measure and should not be considered as a measure ofliquidity 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.