Mercer International Inc

Bull points

• Absolutely. Yes, first on Mastember. As I said at the beginning of the call, we're very excited with how that business is progressing. Growing 60% quarter-on-quarter was fantastic. that business is a business that, from a cash perspective, it handles itself pretty well because when we sign a contract, we get already down payment for the majority of the projects before we start putting it up or building or manufacturing it. So that provides kind of a positive cash flow cycle for that business, different from what we do in the other businesses where it's basically out-of-pocket totally, and then you recover only after you have sold your inventory. That's not the case in mass timber. So it is a cash. For example, last year we lost. Our EBITDA was negative, but cash was almost neutral. Right now we're looking into a second half of the year where the bulk of the projects or about 60% of the projects will be now hyperscalers. Those will provide us higher margins, and therefore we see a second half of the year with better margins than the first half. From a cash flow perspective, I think we'll be positive throughout the year, but it will obviously be much better in the second half, just from a pure EBITDA perspective.
• Absolutely. Yes, first on Mastember. As I said at the beginning of the call, we're very excited with how that business is progressing. Growing 60% quarter-on-quarter was fantastic. that business is a business that, from a cash perspective, it handles itself pretty well because when we sign a contract, we get already down payment for the majority of the projects before we start putting it up or building or manufacturing it. So that provides kind of a positive cash flow cycle for that business, different from what we do in the other businesses where it's basically out-of-pocket totally, and then you recover only after you have sold your inventory. That's not the case in mass timber. So it is a cash. For example, last year we lost. Our EBITDA was negative, but cash was almost neutral. Right now we're looking into a second half of the year where the bulk of the projects or about 60% of the projects will be now hyperscalers. Those will provide us higher margins, and therefore we see a second half of the year with better margins than the first half. From a cash flow perspective, I think we'll be positive throughout the year, but it will obviously be much better in the second half, just from a pure EBITDA perspective.
• Absolutely. Yes, first on Mastember. As I said at the beginning of the call, we're very excited with how that business is progressing. Growing 60% quarter-on-quarter was fantastic. that business is a business that, from a cash perspective, it handles itself pretty well because when we sign a contract, we get already down payment for the majority of the projects before we start putting it up or building or manufacturing it. So that provides kind of a positive cash flow cycle for that business, different from what we do in the other businesses where it's basically out-of-pocket totally, and then you recover only after you have sold your inventory. That's not the case in mass timber. So it is a cash. For example, last year we lost. Our EBITDA was negative, but cash was almost neutral. Right now we're looking into a second half of the year where the bulk of the projects or about 60% of the projects will be now hyperscalers. Those will provide us higher margins, and therefore we see a second half of the year with better margins than the first half. From a cash flow perspective, I think we'll be positive throughout the year, but it will obviously be much better in the second half, just from a pure EBITDA perspective.

Bear points

• The valuation of the assets is very impacted by the current economic conditions. So it would be very difficult to claim a proper value from any asset sale that we could entertain at this point in time. Now that may change as time progresses and the market recovers as we expect it to recover over time. But that obviously puts a damp on what are the options that you have with immediate impact.
• We expect more curtailments to happen. We believe that the situation, especially in Canada with mills running at very low, if any, profitability at all, is just a recipe for additional curtailments.
• We expect more curtailments to happen. We believe that the situation, especially in Canada with mills running at very low, if any, profitability at all, is just a recipe for additional curtailments.