Discounted Cash Flow (DCF) Analysis Levered

Mercer International Inc. (MERC)

$12.47

+0.13 (+1.05%)

All numbers are in Millions, Currency in USD

Stock DCF: 31.17 | 12.47 | undervalue

Free Cash Flow

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	1,169.14	1,457.72	1,624.41	1,423.14	1,803.25	2,030.63	2,286.68	2,575.01	2,899.70	3,265.33
Revenue (%)
Operating Cash Flow	141.93	236.67	244.28	41.56	182.21	229.21	258.11	290.66	327.31	368.58
Operating Cash Flow (%)
Capital Expenditure	-59.69	-87.61	-132.66	-79.16	-160.82	-137.12	-154.41	-173.88	-195.81	-220.50
Capital Expenditure (%)
Free Cash Flow	82.23	149.06	111.63	-37.60	21.39	92.09	103.70	116.78	131.50	148.08

Weighted Average Cost Of Capital

Share price	$ 12.47
Beta	1.522
Diluted Shares Outstanding	66.04
Cost of Debt
Tax Rate	34.38
After-tax Cost of Debt	3.66%
Risk-Free Rate
Market Risk Premium
Cost of Equity	10.691
Total Debt	1,255.78
Total Equity	823.48
Total Capital	2,079.26
Debt Weighting	60.40
Equity Weighting	39.60
Wacc

Build Up Free Cash Flow

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	1,169.14	1,457.72	1,624.41	1,423.14	1,803.25	2,030.63	2,286.68	2,575.01	2,899.70	3,265.33
Operating Cash Flow	141.93	236.67	244.28	41.56	182.21	229.21	258.11	290.66	327.31	368.58
Capital Expenditure	-59.69	-87.61	-132.66	-79.16	-160.82	-137.12	-154.41	-173.88	-195.81	-220.50
Free Cash Flow	82.23	149.06	111.63	-37.60	21.39	92.09	103.70	116.78	131.50	148.08
WACC
PV LFCF						86.51	91.51	96.81	102.41	108.34
SUM PV LFCF										485.58

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	6.45
Free cash flow (t + 1)	151.04
Terminal Value	3,394.23
Present Value of Terminal Value	2,483.21

Intrinsic Value

Enterprise Value	2,968.79
Net Debt	910.17
Equity Value	2,058.62
Shares Outstanding	66.04
Equity Value Per Share	31.17