Mercer International Inc.

Good morning, and welcome to Mercer International's fourth quarter 2025 earnings conference call. On the call today is Juan Carlos Bueno, President and Chief Executive Officer of Mercer International, and Richard Short, CFO and Secretary. I will now hand the call over to Richard Short.

Thanks, Shannon. Good morning, everyone. Thanks for joining us today. I will begin by touching on the financial and operating highlights of the fourth quarter before turning the call to Juan Carlos to provide further color into the markets our operations, and our strategic initiatives. Also, for those of you that have joined today's call by telephone, there is presentation material that we have attached to the investor section of our website. But before turning to our results, I would like to remind you that we will make forward-looking statements in this morning's conference call. According to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, I'd like to call your attention to the risks related to these statements, which are more fully described in our press release and in the company's filings with the Securities and Exchange Commission. Our operating EBITDA for the fourth quarter was negative $20 million, up $8 million when compared to the third quarter's results. This change in performance was largely due to stable production across all our mills and the benefits of our One Goal 100 program. However, market headwinds, including pricing, weak demand, and elevated fiber costs in both Germany and Canada, continued to weigh on our overall results. The current quarter's EBITDA also includes a non-cash inventory impairment of $23 million. In the fourth quarter, we recognized total non-cash impairment charges against our long-lived assets of $216 million, or $3.22 per share. $204 million of this was against the assets of the Peace River Mill, a requirement under U.S. GAAP that reflects the ongoing weakness in the hardwood pulp market. We also recorded a $12 million impairment in our solid wood segment related to the sale of obsolete equipment. Given the challenging hardwood pulp market conditions, there are a number of strategic initiatives underway with the goal of returning the Peace River Mill to profitability. These include expanding softwood pulp production, exploring government support for incremental energy generation, and a carbon capture project. Unfortunately, US GAAP does not allow for the for the inclusion of these initiatives in the impairment assessment. Juan Cardo will provide more detail on these initiatives shortly. Our pulp and solid wood segments both reported negative quarterly EBITDA of $11 million in the fourth quarter. Additional segment disclosures are available in our form 10-K, which can be found on our website and that of the SEC. In the fourth quarter, MBSK markets weakened due to the sustained uncertainty of the global economy. As a result, our softwood sales realizations decreased to $702 per ton down from $728 per ton in the third quarter. The MBSK net price in China saw a small decline to $671 per ton, a $19 decrease from the third quarter. We observed a more significant drop in the North American MBSK list price, which averaged $1,568 per ton in the fourth quarter. a reduction of about $132 from the third quarter. The European MBSK list price remains stable at an average of $1,498 per ton. Hardwood markets in China showed improvement in the fourth quarter, largely due to stronger demand and increased domestic fiber costs. Meanwhile, demand and pricing in North America remain steady. Overall, our hardwood sales realizations were flat at $528 per ton

compared to the third quarter.