Discounted Cash Flow (DCF) Analysis Unlevered

Mercer International Inc. (MERC)

$12.34

-0.13 (-1.04%)

All numbers are in Millions, Currency in USD

Stock DCF: 20.56 | 12.34 | undervalue

Operating Data

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 (%)
EBITDA	244.02	325.46	211.73	198.53	462.81	389.27	438.35	493.62	555.86	625.95
EBITDA (%)
EBIT	158.73	228.73	85.34	69.61	330.61	234.52	264.10	297.40	334.90	377.12
EBIT (%)
Depreciation	85.29	96.73	126.39	128.92	132.20	154.74	174.25	196.23	220.97	248.83
Depreciation (%)

Balance Sheet Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Total Cash	143.30	240.49	351.09	361.10	345.61	385.44	434.04	488.77	550.40	619.80
Total Cash (%)
Account Receivables	206.03	252.69	208.74	227.05	345.35	336.73	379.19	427	480.84	541.47
Account Receivables (%)
Inventories	176.60	303.81	272.60	271.70	356.73	372.02	418.93	471.75	531.24	598.22
Inventories (%)
Accounts Payable	36.15	36.33	73.72	42.73	58.45	66.47	74.85	84.29	94.92	106.89
Accounts Payable (%)
Capital Expenditure	-59.69	-87.61	-132.66	-79.16	-160.82	-137.12	-154.41	-173.88	-195.81	-220.50
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 12.34
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	10.680
Total Debt	1,255.78
Total Equity	814.90
Total Capital	2,070.67
Debt Weighting	60.65
Equity Weighting	39.35
Wacc

Build Up Free Cash

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
EBITDA	244.02	325.46	211.73	198.53	462.81	389.27	438.35	493.62	555.86	625.95
EBIT	158.73	228.73	85.34	69.61	330.61	234.52	264.10	297.40	334.90	377.12
Tax Rate	32.19%	27.46%	200.54%	-54.73%	34.38%	47.97%	47.97%	47.97%	47.97%	47.97%
EBIAT	107.64	165.92	-85.80	107.70	216.95	122.03	137.41	154.74	174.25	196.22
Depreciation	85.29	96.73	126.39	128.92	132.20	154.74	174.25	196.23	220.97	248.83
Accounts Receivable	-	-46.67	43.95	-18.32	-118.29	8.61	-42.46	-47.81	-53.84	-60.63
Inventories	-	-127.21	31.21	0.90	-85.03	-15.29	-46.91	-52.82	-59.48	-66.98
Accounts Payable	-	0.18	37.39	-30.99	15.72	8.02	8.38	9.44	10.63	11.97
Capital Expenditure	-59.69	-87.61	-132.66	-79.17	-160.82	-137.12	-154.41	-173.88	-195.81	-220.50
UFCF	133.24	1.34	20.49	109.05	0.72	140.99	76.27	85.89	96.71	108.91
WACC
PV UFCF						132.49	67.34	71.26	75.41	79.79
SUM PV UFCF										426.29

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	6.42
Free cash flow (t + 1)	111.09
Terminal Value	2,513.30
Present Value of Terminal Value	1,841.32

Intrinsic Value

Enterprise Value	2,267.60
Net Debt	910.17
Equity Value	1,357.44
Shares Outstanding	66.04
Equity Value Per Share	20.56