Suite 1120, 700 West Pender Street, Vancouver, British Columbia, Canada, V6C 1G8

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NO ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ NO ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "non-accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The Registrant had ~~66,037,552~~66,132,492 shares of common stock outstanding as of ~~October~~April 27, ~~2021.~~2022.

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
Revenues	$	469,746		$	333,151		$	1,284,298		$	1,024,945		$	592,741		$	412,720
Costs and expenses
Cost of sales, excluding depreciation and amortization		302,221			272,165			910,244			832,554			416,095			310,197
Cost of sales depreciation and amortization		34,294			31,862			97,175			94,952			32,097			30,946
Selling, general and administrative expenses		19,476			15,388			60,259			49,326			22,198			20,548
Operating income		113,755			13,736			216,620			48,113			122,351			51,029
Other income (expenses)
Interest expense		(16,882	)		(19,864	)		(53,031	)		(60,056	)		(17,464	)		(19,019	)
Loss on early extinguishment of debt		0			0			(30,368	)		0			0			(30,368	)
Other income		4,735			11,898			9,118			12,136			8,246			6,989
Total other expenses, net		(12,147	)		(7,966	)		(74,281	)		(47,920	)		(9,218	)		(42,398	)
Income before income taxes		101,608			5,770			142,339			193			113,133			8,631
Income tax recovery (provision)		(32,490	)		1,775			(45,873	)		(4,451	)
Net income (loss)	$	69,118		$	7,545		$	96,466		$	(4,258	)
Net income (loss) per common share
Income tax provision														(24,236	)		(2,698	)
Net income													$	88,897		$	5,933
Net income per common share
Basic	$	1.05		$	0.11		$	1.46		$	(0.06	)	$	1.35		$	0.09
Diluted	$	1.04		$	0.11		$	1.46		$	(0.06	)	$	1.34		$	0.09
Dividends declared per common share	$	0.0650		$	0.0650		$	0.1950		$	0.2675		$	0.0750		$	0.0650

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Net income (loss)

$
69,118

$
7,545

$
96,466

$
(4,258
)
Other comprehensive income (loss)

Change in unrecognized losses and prior service costs related to defined benefit pension plans

(19
)

8

984

31

Income tax provision

—

—

(681
)

—

Change in unrecognized losses and prior service costs related to defined benefit pension plans, net of tax

(19
)

8

303

31

Foreign currency translation adjustment

(42,110
)

52,280

(59,676
)

21,488

Other comprehensive income (loss), net of taxes

(42,129
)

52,288

(59,373
)

21,519

Total comprehensive income

$
26,989

$
59,833

$
37,093

$
17,261

	Three Months Ended March 31,
	2022			2021
Net income	$	88,897		$	5,933
Other comprehensive income (loss)
Gain (loss) related to defined benefit pension plans		(116	)		1,061
Income tax recovery (provision)		62			(681	)
Gain (loss) related to defined benefit pension plans, net of tax		(54	)		380
Foreign currency translation adjustment		(10,522	)		(36,023	)
Other comprehensive loss, net of taxes		(10,576	)		(35,643	)
Total comprehensive income (loss)	$	78,321		$	(29,710	)

	September 30,			December 31,			March 31,			December 31,
	2021			2020			2022			2021
ASSETS
Current assets
Cash and cash equivalents	$	338,730		$	361,098		$	410,705		$	345,610
Accounts receivable, net		253,731			227,055			387,779			345,345
Inventories		345,107			271,696			353,407			356,731
Prepaid expenses and other		14,708			15,003			17,494			16,619
Total current assets		952,276			874,852			1,169,385			1,064,305
Property, plant and equipment, net		1,141,303			1,109,740			1,130,337			1,135,631
Investment in joint ventures		43,341			46,429			49,574			49,651
Amortizable intangible assets, net		48,955			51,571			47,237			47,902
Operating lease right-of-use assets		10,474			13,251			9,172			9,712
Pension asset								4,009			4,136
Other long-term assets		34,243			31,928			45,887			38,718
Deferred income tax		1,161			1,355			1,343			1,177
Total assets	$	2,231,753		$	2,129,126		$	2,456,944		$	2,351,232
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and other	$	255,571		$	210,994		$	280,366		$	282,307
Pension and other post-retirement benefit obligations		920			802			818			817
Total current liabilities		256,491			211,796			281,184			283,124
Debt		1,162,377			1,145,294
Long-term debt								1,264,525			1,237,545
Pension and other post-retirement benefit obligations		29,938			31,810			20,884			21,252
Finance lease liabilities		55,201			41,329
Operating lease liabilities		7,257			9,933			6,110			6,574
Other long-term liabilities		11,192			10,909			13,270			13,590
Deferred income tax		81,461			77,028			102,637			95,123
Total liabilities		1,603,917			1,528,099			1,688,610			1,657,208
Shareholders’ equity
Common shares $1 par value; 200,000,000 authorized; 66,037,000 issued and outstanding (2020 – 65,868,000)		65,988			65,800
Common shares $1 par value; 200,000,000 authorized; 66,132,000 issued and outstanding (2021 – 66,037,000)								66,083			65,988
Additional paid-in capital		348,098			345,696			348,756			347,902
Retained earnings		300,698			217,106			454,864			370,927
Accumulated other comprehensive loss		(86,948	)		(27,575	)		(101,369	)		(90,793	)
Total shareholders’ equity		627,836			601,027			768,334			694,024
Total liabilities and shareholders’ equity	$	2,231,753		$	2,129,126		$	2,456,944		$	2,351,232

Commitments and contingencies (Note 14)
Subsequent event (Note 8)
Commitments and contingencies (Note 13)
Subsequent event (Note 7)

Common shares

Number
(thousands
of shares)

Amount,
at Par
Value

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Shareholders'
Equity

Three Months Ended September 30:

Balance as of June 30, 2021

66,037

$
65,988

$
347,093

$
235,872

$
(44,819
)

$
604,134

Stock compensation expense

—

—

1,005

—

—

1,005

Net income

—

—

—

69,118

—

69,118

Dividends declared

—

—

—

(4,292
)

—

(4,292
)
Other comprehensive loss

—

—

—

—

(42,129
)

(42,129
)
Balance as of September 30, 2021

66,037

$
65,988

$
348,098

$
300,698

$
(86,948
)

$
627,836

Balance as of June 30, 2020

65,868

$
65,800

$
344,688

$
231,101

$
(147,329
)

$
494,260

Stock compensation expense

—

—

895

—

—

895

Net income

—

—

—

7,545

—

7,545

Dividends declared

—

—

—

(4,281
)

—

(4,281
)
Other comprehensive income

—

—

—

—

52,288

52,288

Balance as of September 30, 2020

65,868

$
65,800

$
345,583

$
234,365

$
(95,041
)

$
550,707

																		Common shares
Nine Months Ended September 30:
Balance as of December 31, 2020	65,868		$	65,800		$	345,696		$	217,106		$	(27,575	)	$	601,027
Shares issued on grants of restricted shares	49			68			(68	)		—			—			—
																		Number (thousands of shares)		Amount, at Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
Three Months Ended March 31:
Balance as of December 31, 2021																			66,037	$	65,988	$	347,902		$	370,927		$	(90,793	)	$	694,024
Shares issued on grants of performance share units	120			120			(120	)		—			—			—			95		95		(95	)		—			—			—
Stock compensation expense	—			—			2,590			—			—			2,590			—		—		949			—			—			949
Net income	—			—			—			96,466			—			96,466			—		—		—			88,897			—			88,897
Dividends declared	—			—			—			(12,874	)		—			(12,874	)		—		—		—			(4,960	)		—			(4,960	)
Other comprehensive loss	—			—			—			—			(59,373	)		(59,373	)		—		—		—			—			(10,576	)		(10,576	)
Balance as of September 30, 2021	66,037		$	65,988		$	348,098		$	300,698		$	(86,948	)	$	627,836
Balance as of March 31, 2022																			66,132	$	66,083	$	348,756		$	454,864		$	(101,369	)	$	768,334

Balance as of December 31, 2019	65,629		$	65,598		$	344,994		$	256,371		$	(116,560	)	$	550,403
Shares issued on grants of restricted shares	68			31			(31	)		—			—			—
Balance as of December 31, 2020																			65,868	$	65,800	$	345,696		$	217,106		$	(27,575	)	$	601,027
Shares issued on grants of performance share units	195			195			(195	)		—			—			—			120		120		(120	)		—			—			—
Stock compensation expense	—			—			815			—			—			815			—		—		610			—			—			610
Net loss	—			—			—			(4,258	)		—			(4,258	)
Net income																			—		—		—			5,933			—			5,933
Dividends declared	—			—			—			(17,610	)		—			(17,610	)		—		—		—			(4,289	)		—			(4,289	)
Repurchase of common shares	(24	)		(24	)		—			(138	)		—			(162	)
Other comprehensive income	—			—			—			—			21,519			21,519
Balance as of September 30, 2020	65,868		$	65,800		$	345,583		$	234,365		$	(95,041	)	$	550,707
Other comprehensive loss																			—		—		—			—			(35,643	)		(35,643	)
Balance as of March 31, 2021																			65,988	$	65,920	$	346,186		$	218,750		$	(63,218	)	$	567,638

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
Cash flows from (used in) operating activities
Net income (loss)	$	69,118		$	7,545		$	96,466		$	(4,258	)
Adjustments to reconcile net income (loss) to cash flows from operating activities
Net income													$	88,897		$	5,933
Adjustments to reconcile net income to cash flows from operating activities
Depreciation and amortization		34,315			31,884			97,237			95,031			32,116			30,967
Deferred income tax provision (recovery)		5,005			(4,255	)		7,485			(10,330	)
Inventory impairment		0			8,000			0			25,998
Deferred income tax provision														8,383			1,204
Loss on early extinguishment of debt		0			0			30,368			0			0			30,368
Defined benefit pension plans and other post-retirement benefit plan expense		879			769			2,654			2,270			438			919
Stock compensation expense		1,005			895			2,590			815			949			610
Gain on sale of investments		0			(15,443	)		0			(15,443	)
Foreign exchange transaction losses (gains)		(5,721	)		3,384			(12,361	)		4,120
Foreign exchange transaction gains														(3,828	)		(8,606	)
Other		(844	)		(1,801	)		(1,104	)		(2,993	)		(801	)		(616	)
Defined benefit pension plans and other post-retirement benefit plan contributions		(1,065	)		(783	)		(3,190	)		(2,495	)		(1,194	)		(923	)
Changes in working capital
Accounts receivable		(31,441	)		17,226			(27,500	)		11,238			(52,127	)		(12,423	)
Inventories		(39,512	)		(8,031	)		(82,275	)		(20,443	)		(1,725	)		(20,799	)
Accounts payable and accrued expenses		12,180			(4,219	)		46,783			(54,000	)		(567	)		4,436
Other		(3,775	)		(6,683	)		(5,569	)		(6,759	)		(1,731	)		(782	)
Net cash from (used in) operating activities		40,144			28,488			151,584			22,751			68,810			30,288
Cash flows from (used in) investing activities
Purchase of property, plant and equipment		(38,306	)		(14,639	)		(125,692	)		(59,201	)		(33,293	)		(25,262	)
Acquisition of Mercer Mass Timber (Note 2)		(51,258	)		0			(51,258	)		0
Insurance proceeds		1,530			0			21,578			0			6,410			0
Purchase of amortizable intangible assets		(460	)		(30	)		(1,669	)		(557	)		(60	)		(641	)
Purchase of investments		0			0			0			(9,370	)
Proceeds from sale of investments		0			21,540			0			21,540
Other		2,873			396			2,764			1,243			153			(394	)
Net cash from (used in) investing activities		(85,621	)		7,267			(154,277	)		(46,345	)		(26,790	)		(26,297	)
Cash flows from (used in) financing activities
Redemption of senior notes		0			0			(824,557	)		0			0			(824,557	)
Proceeds from issuance of senior notes		0			0			875,000			0			0			875,000
Proceeds from (repayment of) revolving credit facilities, net		3,967			8,750			(53,145	)		34,359			30,504			(15,070	)
Dividend payments		(4,293	)		(4,282	)		(8,582	)		(13,329	)
Payment of note issuance costs		(69	)		0			(14,483	)		0
Payment of debt issuance costs														(1,184	)		(14,414	)
Proceeds from government grants		361			0			8,893			299			1,067			8,532
Repurchase of common shares		0			0			0			(162	)
Payment of finance lease obligations														(4,935	)		(1,703	)
Other		(2,254	)		(302	)		(2,165	)		(2,729	)		(843	)		3,624
Net cash from (used in) financing activities		(2,288	)		4,166			(19,039	)		18,438			24,609			31,412
Effect of exchange rate changes on cash and cash equivalents		1,961			2,325			(636	)		(349	)		(1,534	)		(1,418	)
Net increase (decrease) in cash and cash equivalents		(45,804	)		42,246			(22,368	)		(5,505	)
Net increase in cash and cash equivalents														65,095			33,985
Cash and cash equivalents, beginning of period		384,534			303,334			361,098			351,085			345,610			361,098
Cash and cash equivalents, end of period	$	338,730		$	345,580		$	338,730		$	345,580		$	410,705		$	395,083

Supplemental cash flow disclosure:
Cash paid for interest		$	32,095	$	38,029	$	72,205	$	76,257	$	32,073	$	39,026
Cash paid for income taxes		$	9,039	$	2,916	$	14,174	$	17,797	$	18,900	$	1,845
Supplemental schedule of non-cash investing and financing activities:	Supplemental schedule of non-cash investing and financing activities:
Leased production equipment		$	2,215	$	510	$	25,394	$	11,206
Leased production and other equipment										$	0	$	15,969

The Interim Consolidated Financial Statements contained herein include the accounts of Mercer International Inc. ("Mercer Inc.") and all of its subsidiaries (collectively the "Company"). Mercer Inc. owns 100% of its subsidiaries with the exception of the 50% joint venture interest in the Cariboo mill with West Fraser Mills Ltd., which is accounted for using the equity method. The Company's shares of common stock are quoted and listed for trading on the NASDAQ Global Select Market.

The Interim Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). The year-end Consolidated Balance Sheet data was derived from audited financial statements. The footnote disclosure included herein has been prepared in accordance with accounting principles generally accepted for interim financial statements in the United States ("GAAP"). The unaudited Interim Consolidated Financial Statements should be read together with the audited Consolidated Financial Statements and accompanying notes included in the Company's latest Annual Report on Form 10‑K for the fiscal year ended December 31, ~~2020.~~2021. In the opinion of the Company, the unaudited Interim Consolidated Financial Statements contained herein have been prepared on a consistent basis with the audited Consolidated Financial Statements and accompanying notes included in the Company's latest Annual Report on Form 10‑K for the fiscal year ended December 31, ~~2020~~2021 and contain all adjustments necessary for a fair statement of the results of the interim periods included. The results for the periods included herein may not be indicative of the results for the entire year.

In these Interim Consolidated Financial Statements, unless otherwise indicated, all amounts are expressed in United States dollars ("U.S. dollars" or "$"). The symbol "€" refers to euros and the symbol "C$" refers to Canadian dollars.

Preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant management judgment is required in determining the accounting for, among other things, pension and other post-retirement benefit obligations, deferred income taxes (valuation allowance and permanent reinvestment), depreciation and amortization, future cash flows associated with impairment testing for long-lived assets, the allocation of the purchase price ~~for~~in a ~~group of assets or a~~ business combination to the assets acquired and liabilities assumed, legal liabilities and contingencies. Actual results could differ materially from these estimates, and changes in these estimates are recorded when known.

The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. ~~COVID-19~~During the pandemic, there have been several "waves" or periods during which there has been a significant widespread increase in reported infections and ~~health risks, including from~~the emergence and rapid spread of new variants ~~continue.~~

~~The severity of the impact~~ of the COVID-19 ~~pandemic~~virus. In response to such waves, various countries have from time to time re-imposed various restrictions on social, business, travel and other activities. Such economic disruption could have a material adverse effect on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company's customers, all of which are uncertain and cannot be predicted. The Company's future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operational challenges faced by its customers.Company’s business.

As of the date of issuance of these Interim Consolidated Financial Statements, the Company has not had significant ~~credit losses,~~ downtime or closures at its mills or disruptions to raw material supplies or access to logistics networks due to the COVID-19 pandemic, but the extent to which the COVID-19 pandemic may materially impact the Company's future financial condition, liquidity, or results of operations remains uncertain.

The Company’s future results of operations and liquidity, however, could be adversely impacted by economic factors arising from the pandemic that affect our business and customers. For instance, we may experience delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operational challenges faced by its customers.

~~On August 5, 2021, the Company acquired a cross-laminated timber facility for $51,258 cash, including $1,258 of acquisition costs. The acquired facility is called Mercer Mass Timber LLC (“MMT”).~~

MMT is accounted for as an acquisition of a group of assets as management determined it does not qualify as an acquisition of a business under GAAP. Substantially all of the purchase price was allocated to the land, building and production equipment acquired.

Inventories as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, were comprised of the following:

	September 30,		December 31,		March 31,		December 31,
	2021		2020		2022		2021
Raw materials	$	107,681	$	74,526	$	130,652	$	106,434
Finished goods		129,627		88,256		106,448		140,829
Spare parts and other		107,799		108,914		116,307		109,468
	$	345,107	$	271,696	$	353,407	$	356,731

Accounts payable and other as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, was comprised of the following:

	September 30,		December 31,		March 31,		December 31,
	2021		2020		2022		2021
Trade payables	$	48,104	$	42,730	$	67,061	$	58,451
Accrued expenses		129,893		90,875		83,834		76,409
Interest payable		11,180		33,241		11,356		26,506
Income tax payable		36,676		23,256		51,744		56,241
Government grants (a)		7,260		7,161
Insurance proceeds		0		3,369
Payroll-related accruals						19,596		20,707
Wastewater fee (a)						20,538		19,248
Finance lease liability						7,314		8,467
Operating lease liability						3,115		3,192
Government grants (b)						5,601		7,302
Other		22,458		10,362		10,207		5,784
	$	255,571	$	210,994	$	280,366	$	282,307

Debt as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, was comprised of the following:

September 30,

December 31,

Maturity

2021

2020

Senior notes (a)

5.500% senior notes

2026

$
300,000

$
300,000

5.125% senior notes

2029

875,000

0

6.500% senior notes

2024

0

250,000

7.375% senior notes

2025

0

550,000

Credit arrangements

€200 million joint revolving credit facility (b)

2023

0

0

C$60 million revolving credit facility (c)

2024

3,924

21,992

C$60 million revolving credit facility (d)

2023

0

32,988

€2.6 million demand loan (e)

0

0

1,178,924

1,154,980

Less: unamortized premium and issuance costs, net

(16,547
)

(9,686
)

$
1,162,377

$
1,145,294

		March 31,			December 31,
	Maturity	2022			2021
Senior notes (a)
5.500% senior notes	2026	$	300,000		$	300,000
5.125% senior notes	2029		875,000			875,000

Credit arrangements
€200 million German joint revolving credit facility (b)	2023		0			0
C$160 million Canadian joint revolving credit facility (c)	2027		54,017			0
C$60 million Peace River revolving credit facility (c)			0			22,874
C$60 million Celgar revolving credit facility (c)			0			0
€2.6 million demand loan (d)			0			0

Finance lease liability			58,081			64,041
			1,287,098			1,261,915
Less: unamortized senior note issuance costs			(15,259	)		(15,903	)
Less: finance lease liability due within one year			(7,314	)		(8,467	)
		$	1,264,525		$	1,237,545

The maturities of the principal portion of ~~debt~~the senior notes and credit arrangements as of ~~September 30, 2021~~March 31, 2022 were as follows:

2021	$	0
			Senior Notes and Credit Arrangements
2022		0	$	0
2023		0		0
2024		3,924		0
2025		0		0
2026				300,000
Thereafter		1,175,000		929,017
	$	1,178,924	$	1,229,017

Certain of the Company's debt instruments were issued under agreements which, among other things, may limit its ability and the ability of its subsidiaries to make certain payments, including dividends. These limitations are subject to specific exceptions. As of ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with the terms of its debt agreements.

The 2029 Senior Notes and the senior notes which mature on January 15, 2026 (the “2026 Senior Notes” and collectively with the 2029 Senior Notes, the “Senior Notes”) are general unsecured senior obligations of the Company. The Company may redeem all or a part of the Senior Notes, upon not less than 10 days’ or more than 60 days’ notice at the redemption price plus accrued and unpaid interest to (but not including) the applicable redemption date.

The following table presents the redemption prices (expressed as percentages of principal amount) and the redemption periods of the outstanding Senior Notes:

2026 Senior Notes

2029 Senior Notes

2026 Senior Notes

2029 Senior Notes

12 Month Period Beginning

Percentage

12 Month Period Beginning

Percentage

12 Month Period Beginning

Percentage

January 15, 2021

102.750%

February 1, 2024

102.563%

January 15, 2022

101.375%

February 1, 2025

101.281%

101.375%

February 1, 2024

102.563%

January 15, 2023 and thereafter

100.000%

February 1, 2026 and thereafter

100.000%

February 1, 2025

101.281%

February 1, 2026 and thereafter

100.000%

Pension benefits are based on employees' earnings and years of service. The defined benefit plans are funded by contributions from the Company based on actuarial estimates and statutory requirements. The components of the net benefit costs for the Celgar and Peace River defined benefit plans, in aggregate for the three ~~and nine~~ month periods ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were as follows:

	Nine Months Ended September 30,												Three Months Ended March 31,
	2021						2020						2022						2021
	Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits			Pension			Other Post- Retirement Benefits
Service cost	$	2,962		$	228		$	2,530		$	192		$	913		$	49		$	1,025		$	79
Interest cost		2,647			294			2,502			286			965			105			917			102
Expected return on plan assets		(3,392	)		—			(3,271	)		—			(1,478	)		0			(1,174	)		0
Amortization of unrecognized items		509			(594	)		693			(662	)		62			(178	)		176			(206	)
Net benefit costs	$	2,726		$	(72	)	$	2,454		$	(184	)	$	462		$	(24	)	$	944		$	(25	)

The components of the net benefit costs other than service cost are recorded in "Other income" in the Interim Consolidated Statements of Operations. The amortization of unrecognized items relates to net actuarial losses and prior service costs.

Effective December 31, 2008, the defined benefit plans at the Celgar mill were closed to new ~~members. In addition,~~members and the ~~related defined benefit~~ service accrual ~~ceased on December 31, 2008, and~~ceased. Effective January 1, 2009, the members began to receive pension benefits, at a fixed contractual rate, under a new defined contribution ~~plan effective January 1, 2009.~~plan. During the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2021,~~March 31, 2022, the Company made contributions of ~~$226 and $921, respectively~~$266 to this plan ~~(2020~~(2021 – ~~$320 and $791)~~$380).

The Company participates in a multiemployer plan for the hourly-paid employees at the Celgar mill. The contributions to the plan are determined based on a percentage of pensionable earnings pursuant to a collective bargaining agreement. The Company has no current or future contribution obligations in excess of the contractual contributions. During the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2021,~~March 31, 2022, the Company made contributions of ~~$625 and $1,949, respectively~~$558 to this plan ~~(2020~~(2021 – ~~$475 and $1,481)~~$714).

Differences between the U.S. Federal statutory and the Company's effective tax rates for the three ~~and nine~~ month periods ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
U.S. Federal statutory rate	21%			21%			21%			21%			21%			21%
U.S. Federal statutory rate on income before income taxes	$	(21,337	)	$	(1,212	)	$	(29,891	)	$	(41	)	$	(23,760	)	$	(1,813	)
Tax differential on foreign income		(7,309	)		611			(16,689	)		(1,270	)		(9,779	)		(2,848	)
Effect of foreign earnings (a)		1,965			468			(4,655	)		(2,402	)		(996	)		(3,112	)
Valuation allowance (b)		(1,073	)		(919	)		(12,025	)		(4,084	)		6,189			(11,117	)
Foreign exchange on settlement of debt														3,101			—
Tax benefit of partnership structure		783			935			2,349			2,805			783			893
Non-taxable foreign subsidies		733			734			2,224			2,098			698			748
True-up of prior year taxes		2,294			(1,996	)		5,418			(2,150	)		1,662			3,170
Annual effective tax rate adjustment		(9,000	)		—			9,000			—			—			13,300
Other, net		454			3,154			(1,604	)		593			(2,134	)		(1,919	)
Income tax recovery (provision)	$	(32,490	)	$	1,775		$	(45,873	)	$	(4,451	)
Income tax provision													$	(24,236	)	$	(2,698	)
Comprised of:
Current income tax provision	$	(27,485	)	$	(2,480	)	$	(38,388	)	$	(14,781	)	$	(15,853	)	$	(1,494	)
Deferred income tax recovery (provision)		(5,005	)		4,255			(7,485	)		10,330
Income tax recovery (provision)	$	(32,490	)	$	1,775		$	(45,873	)	$	(4,451	)
Deferred income tax provision														(8,383	)		(1,204	)
Income tax provision													$	(24,236	)	$	(2,698	)

~~The Company's board of directors declared quarterly dividends during the nine month period ended September 30, 2021 as follows:~~

On ~~October 28, 2021,~~February 17, 2022, the Company's board of directors declared a quarterly dividend of ~~$0.065~~$0.075 per common share. Payment of the dividend was made on April 6, 2022 to all shareholders of record on March 30, 2022.

On April 28, 2022, the Company's board of directors declared a quarterly dividend of $0.075 per common share. Payment of the dividend will be made on ~~December 30, 2021~~July 7, 2022 to all shareholders of record on ~~December 22, 2021.~~June 29, 2022. Future dividends are subject to approval by the board of directors and may be adjusted as business and industry conditions warrant.

The Company has a stock incentive plan which provides for options, restricted stock rights, restricted shares, performance shares, performance share units ("PSUs") and stock appreciation rights to be awarded to employees, consultants and non-employee directors. During the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2021,~~March 31, 2022, there were 0 issued and outstanding options, restricted stock rights, performance shares or stock appreciation rights. As of ~~September 30, 2021,~~March 31, 2022, after factoring in all allocated shares, there remain approximately ~~1.2~~0.5 million common shares available for grant.

PSUs comprise rights to receive common shares at a future date that are contingent on the Company and the grantee achieving certain performance objectives. The performance objective period is generally three years. For the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2021,~~March 31, 2022, the Company recognized an expense of ~~$823 and $2,118, respectively~~$766 related to PSUs ~~(2020~~(2021 – ~~$757 and $444)~~$473).

The following table summarizes PSU activity during the ~~nine month period ended September 30, 2021 was as follows:~~period:

Restricted shares generally vest at the end of one year. For the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2021,~~March 31, 2022, the Company recognized an expense of ~~$182 and $472, respectively~~$183 related to restricted shares ~~(2020~~(2021 – ~~$138 and $371)~~$137). As of ~~September 30, 2021,~~March 31, 2022, the total remaining unrecognized compensation cost related to restricted shares amounted to approximately ~~$487~~$122 which will be amortized over the remaining vesting periods.

The reconciliation of basic and diluted net income per common share ~~activity during~~for the ~~nine~~three month ~~period~~periods ended ~~September 30,~~March 31, 2022 and 2021 was as follows:

The calculation of diluted net income per common share does not assume the exercise of any instruments that would have an anti-dilutive effect on net income per common share. For the three month periods ended March 31, 2022 and 2021 there were no anti-dilutive instruments.

~~The reconciliation of basic and diluted net income (loss) per common share for the three and nine month periods ended September 30, 2021 and 2020 was as follows:~~

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Net income (loss)

Basic and diluted

$
69,118

$
7,545

$
96,466

$
(4,258
)

Net income (loss) per common share

Basic

$
1.05

$
0.11

$
1.46

$
(0.06
)
Diluted

$
1.04

$
0.11

$
1.46

$
(0.06
)

Weighted average number of common shares outstanding:

Basic (a)

65,988,357

65,799,946

65,929,712

65,757,921

Effect of dilutive instruments:

PSUs

317,674

79,489

318,404

—

Restricted shares

—

11,413

31,561

—

Diluted

66,306,031

65,890,848

66,279,677

65,757,921

The calculation of diluted net income (loss) per common share does not assume the exercise of any instruments that would have an anti-dilutive effect on net income (loss) per common share. Instruments excluded from the calculation of net income (loss) per common share because they were anti-dilutive for the three and nine month periods ended September 30, 2021 and 2020 were as follows:

The change in the accumulated other comprehensive loss by component (net of tax) for the ~~nine~~three month ~~period~~periods ended ~~September 30,~~March 31, 2022 and 2021 was as follows:

The Company enters into related party transactions with its joint ventures. For the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2021,~~March 31, 2022, pulp purchases from the Company's 50% owned Cariboo mill, which are transacted at the Cariboo mill's cost, were ~~$21,136 and $69,331, respectively (2020~~$20,651 (2021 – ~~$20,717 and $54,253)~~$21,043) and as of ~~September 30, 2021~~March 31, 2022, the Company had a receivable balance from the Cariboo mill of ~~$3,079~~$9,919 (December 31, ~~2020~~2021 – ~~$3,518)~~$5,688). For the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2021,~~March 31, 2022, services from the Company's 50% owned logging and chipping operation, which are transacted at arm's length negotiated prices, were ~~$2,646 and $7,880, respectively (2020~~$4,660 (2021 – ~~$3,265 and $11,543)~~$4,624) and as of ~~September 30, 2021~~March 31, 2022, the Company had a payable balance to the operation of ~~$2,351~~$3,192 (December 31, ~~2020~~2021 – ~~$1,953)~~$2,400).

The Company is managed based on the primary products it manufactures: pulp and wood products. Accordingly, the Company's 4 pulp mills and its 50% interest in the Cariboo mill are aggregated into the pulp segment, and the Friesau sawmill is a separate reportable segment, wood products. The Company's sandalwood ~~business~~ and ~~MMT~~cross-laminated timber businesses are included in ~~Corporate~~corporate and ~~Other~~other as they do not meet the criteria to be reported as separate reportable segments.

None of the income or loss items following operating income in the Company's Interim Consolidated Statements of Operations are allocated to the segments, as those items are reviewed separately by management.

Information about certain segment data for the three ~~and nine~~ month periods ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ was as follows:

Three Months Ended September 30, 2021	Pulp		Wood Products		Corporate and Other			Consolidated
Three Months Ended March 31, 2022										Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	396,743	$	70,723	$	2,280		$	469,746	$	485,931	$	101,033	$	5,777		$	592,741
Operating income (loss)	$	99,918	$	18,299	$	(4,462	)	$	113,755	$	86,236	$	40,479	$	(4,364	)	$	122,351
Depreciation and amortization	$	29,982	$	3,675	$	658		$	34,315	$	27,684	$	3,637	$	795		$	32,116
Total assets (a)										$	1,841,105	$	289,080	$	326,759		$	2,456,944
Revenues by major products
Pulp	$	374,287	$	0	$	0		$	374,287	$	446,911	$	0	$	0		$	446,911
Lumber		0		67,605		0			67,605		0		92,366		3,764			96,130
Energy and chemicals		22,456		1,801		2,280			26,537		39,020		5,177		2,013			46,210
Wood residuals		0		1,317		0			1,317		0		3,490		0			3,490
Total revenues	$	396,743	$	70,723	$	2,280		$	469,746	$	485,931	$	101,033	$	5,777		$	592,741
Revenues by geographical markets (a)
Revenues by geographical markets (b)
U.S.	$	48,627	$	26,812	$	975		$	76,414	$	48,162	$	54,100	$	3,992		$	106,254
Foreign countries
Germany		125,149		18,726		0			143,875		140,054		21,708		0			161,762
China		100,174		412		0			100,586		145,998		182		0			146,180
Other countries		122,793		24,773		1,305			148,871		151,717		25,043		1,785			178,545
											437,769		46,933		1,785			486,487
Total revenues	$	396,743	$	70,723	$	2,280		$	469,746	$	485,931	$	101,033	$	5,777		$	592,741

Three Months Ended March 31, 2021	Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	339,756	$	70,987	$	1,977		$	412,720
Operating income (loss)	$	25,296	$	27,977	$	(2,244	)	$	51,029
Depreciation and amortization	$	27,046	$	3,723	$	198		$	30,967
Revenues by major products
Pulp	$	317,582	$	0	$	0		$	317,582
Lumber		0		67,311		0			67,311
Energy and chemicals		22,174		2,114		1,977			26,265
Wood residuals		0		1,562		0			1,562
Total revenues	$	339,756	$	70,987	$	1,977		$	412,720
Revenues by geographical markets (a)
U.S.	$	45,872	$	45,092	$	759		$	91,723
Foreign countries
Germany		92,537		12,117		0			104,654
China		95,535		377		0			95,912
Other countries		105,812		13,401		1,218			120,431
		293,884		25,895		1,218			320,997
Total revenues	$	339,756	$	70,987	$	1,977		$	412,720

Three Months Ended September 30, 2020

Pulp

Wood
Products

Corporate
and Other

Consolidated

Revenues from external customers

$
274,916

$
57,053

$
1,182

$
333,151

Operating income (loss)

$
3,753

$
11,963

$
(1,980
)

$
13,736

Depreciation and amortization

$
28,251

$
3,446

$
187

$
31,884

Revenues by major products

Pulp

$
253,056

$
0

$
0

$
253,056

Lumber

0

53,612

0

53,612

Energy and chemicals

21,860

2,226

1,182

25,268

Wood residuals

0

1,215

0

1,215

Total revenues

$
274,916

$
57,053

$
1,182

$
333,151

Revenues by geographical markets (a)

U.S.

$
29,295

$
31,466

$
540

$
61,301

Germany

79,535

11,744

0

91,279

China

83,554

0

0

83,554

Other countries

82,532

13,843

642

97,017

Total revenues

$
274,916

$
57,053

$
1,182

$
333,151

Nine Months Ended September 30, 2021

Pulp

Wood
Products

Corporate
and Other

Consolidated

Revenues from external customers

$
1,046,748

$
232,149

$
5,401

$
1,284,298

Operating income (loss)

$
138,552

$
88,590

$
(10,522
)

$
216,620

Depreciation and amortization

$
84,995

$
11,146

$
1,096

$
97,237

Total assets (a)

$
1,765,620

$
249,380

$
216,753

$
2,231,753

Revenues by major products

Pulp

$
989,060

$
0

$
0

$
989,060

Lumber

0

221,201

0

221,201

Energy and chemicals

57,688

6,607

5,401

69,696

Wood residuals

0

4,341

0

4,341

Total revenues

$
1,046,748

$
232,149

$
5,401

$
1,284,298

Revenues by geographical markets (b)

U.S.

$
128,905

$
125,514

$
2,281

$
256,700

Germany

318,781

48,265

0

367,046

China

263,717

1,258

0

264,975

Other countries

335,345

57,112

3,120

395,577

Total revenues

$
1,046,748

$
232,149

$
5,401

$
1,284,298

Nine Months Ended September 30, 2020

Pulp

Wood
Products

Corporate
and Other

Consolidated

Revenues from external customers

$
876,567

$
144,558

$
3,820

$
1,024,945

Operating income (loss)

$
33,302

$
21,845

$
(7,034
)

$
48,113

Depreciation and amortization

$
85,841

$
8,627

$
563

$
95,031

Revenues by major products

Pulp

$
808,923

$
0

$
0

$
808,923

Lumber

0

132,209

0

132,209

Energy and chemicals

67,644

7,486

3,820

78,950

Wood residuals

0

4,863

0

4,863

Total revenues

$
876,567

$
144,558

$
3,820

$
1,024,945

Revenues by geographical markets (a)

U.S.

$
102,813

$
66,710

$
1,701

$
171,224

Germany

246,775

38,941

0

285,716

China

247,916

0

0

247,916

Other countries

279,063

38,907

2,119

320,089

Total revenues

$
876,567

$
144,558

$
3,820

$
1,024,945

As of December 31, ~~2020,~~2021, the Company had total assets of ~~$1,740,233~~$1,882,078 in the pulp segment, ~~$112,267~~$258,965 in the wood products segment and ~~$276,626~~$210,189 in corporate and other. Total assets for the pulp segment includes the Company's ~~$46,429~~$49,651 investment in joint ventures, primarily for the Cariboo mill.

Revenues between segments are accounted for at prices that approximate fair value. These include revenues from the sale of residual fiber from the wood products segment to the pulp segment for use in the pulp production process and from the sale of residual fuel from the pulp segment to the wood products segment for use in energy production. For the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2021,~~March 31, 2022, the pulp segment sold ~~$88 and $239, respectively~~$nil of residual fuel to the wood products segment ~~(2020~~(2021 – ~~$42 and $388)~~$99) and the wood products segment sold ~~$2,536 and $8,369, respectively~~$6,851 of residual fiber to the pulp segment ~~(2020~~(2021 – ~~$2,246 and $9,676)~~$2,932).

Due to their short-term maturity, the carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and other approximates their fair value.

The estimated fair values of the Company's outstanding debt under the fair value hierarchy as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were as follows:

	Fair value measurements as of September 30, 2021 using:								Fair value measurements as of March 31, 2022 using:
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Revolving credit facilities	$	0	$	3,924	$	0	$	3,924	$	0	$	54,017	$	0	$	54,017
Senior notes		0		1,199,969		0		1,199,969		0		1,146,625		0		1,146,625
	$	0	$	1,203,893	$	0	$	1,203,893	$	0	$	1,200,642	$	0	$	1,200,642

	Fair value measurements as of December 31, 2020 using:								Fair value measurements as of December 31, 2021 using:
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Revolving credit facilities	$	0	$	54,980	$	0	$	54,980	$	0	$	22,874	$	0	$	22,874
Senior notes		0		1,131,229		0		1,131,229		0		1,197,449		0		1,197,449
	$	0	$	1,186,209	$	0	$	1,186,209	$	0	$	1,220,323	$	0	$	1,220,323

The carrying value of the revolving credit facilities classified as Level 2 approximates the fair value as the variable interest rates reflect current interest rates for financial instruments with similar characteristics and maturities.

The fair value of the senior notes classified as Level 2 was determined using quoted prices in a dealer market, or using recent market transactions. The Company's senior notes are not carried at fair value in the Interim Consolidated Balance Sheets as of ~~September 30, 2021~~March 31, 2022 or December 31, ~~2020.~~2021. However, fair value disclosure is required. The carrying value of the Company's senior notes, net of unamortized note issuance costs, ~~and premium is $1,158,453~~was $1,159,741 as of ~~September 30, 2021~~March 31, 2022 (December 31, ~~2020~~2021 – ~~$1,090,314)~~$1,159,097).

The Company’s credit risk is primarily attributable to cash held in bank accounts and accounts receivable. The Company maintains cash balances in foreign financial institutions in excess of insured limits. The Company limits its credit exposure on cash held in bank accounts by periodically investing cash in excess of short-term operating requirements and debt obligations in low risk government bonds, or similar debt instruments. The Company’s credit risk associated with the sale of pulp, lumber and other wood residuals is managed through setting credit limits, the purchase of credit insurance and for certain customers a letter of credit is received prior to shipping the product. The Company reviews new customers’ credit history before granting credit and conducts regular reviews of existing customers’ credit performance. Concentrations of credit risk on the sale of pulp, lumber and other wood residuals are with customers and agents based primarily in Germany, China and the U.S.

The Company’s exposure to credit losses may increase if its customers are adversely affected by the COVID-19 pandemic. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables if the cash flows of the Company’s customers are adversely impacted by the COVID-19 pandemic. As of ~~September 30, 2021,~~March 31, 2022, the Company has not had significant credit losses due to the COVID-19 pandemic.

The carrying amount of cash and cash equivalents of ~~$338,730~~$410,705 and accounts receivable of ~~$253,731~~$387,779 recorded in the Interim Consolidated Balance Sheet, net of any allowances for losses, represents the Company’s maximum exposure to credit risk.

This quarterly report on Form 10-Q contains “non-GAAP financial measures”, that is, financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measure calculated and presented in accordance with the generally accepted accounting principles in the United States, referred to as “GAAP”. Specifically, we make use of the non-GAAP measure “Operating EBITDA”.

Operating EBITDA is defined as operating income plus depreciation and amortization and non-recurring capital 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 income as a performance measure primarily because depreciation expense and non-recurring capital 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 underlying cost 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 income, ~~(loss),~~ including financing costs 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 income ~~(loss)~~ or operating income 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 non-recurring 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 of liquidity 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.

In this document: (i) unless the context otherwise requires, references to “we”, “our”, “us”, the “Company” or “Mercer” mean Mercer International Inc. and its subsidiaries; (ii) references to “Mercer Inc.” mean the Company excluding its subsidiaries; (iii) information is provided as of ~~September 30, 2021,~~March 31, 2022, unless otherwise stated; (iv) our reporting currency is dollars and references to “€” mean euros and “C$” mean Canadian dollars; (v) “ADMTs” refers to air-dried metric tonnes; (vi) “NBSK” refers to northern bleached softwood kraft; (vii) “NBHK” refers to northern bleached hardwood kraft; (viii) “MW” refers to megawatts and “MWh” refers to megawatt hours; (ix) “Mfbm” refers to thousand board feet of lumber and “MMfbm” mean million board feet of lumber; and (x) our lumber metrics are converted from cubic meters to Mfbm using a conversion ratio of 1.6 cubic meters to one Mfbm, which is the ratio commonly used in the industry.

Due to rounding, numbers presented throughout this report may not add up precisely to totals we provide and percentages may not precisely reflect the absolute figure.

The following discussion and analysis of our results of operations and financial condition for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 should be read in conjunction with our Interim Consolidated Financial Statements and related notes included in this quarterly report, as well as our most recent annual report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 filed with the Securities and Exchange Commission, referred to as the “SEC”.

Each segment offers primarily different products and requires different manufacturing processes, technology and sales and marketing.

~~In August 2021, we acquired~~ a cross-laminated timber (“CLT”) facility located in Spokane Washington for approximately $51.3 million. Its results are included and reported with Corporate and Other as it does not meet the criteria to be reported as a separate reportable segment.

In the first quarter of 2022, we achieved record quarterly pulp, lumber and energy revenues. Pulp and lumber revenues were driven by low customer inventory levels and restricted supply caused by global logistics issues. Our energy revenues benefitted from both strong demand and higher prices for energy in Germany where first quarter 2022 prices were more than double those of the comparable quarter of 2021. While some of our German mills have the right to sell surplus energy at stipulated prices, they may also elect to sell their surplus energy at applicable market rates if circumstances so warrant.

As we move into the second quarter, we currently expect some continued upward pricing pressure on pulp prices as a result of current supply-demand dynamics. While lumber prices in the United States have declined in the last few weeks, we generally expect them to remain at historically strong levels into the summer. Further, we currently expect strong energy demand and prices in Germany to continue in the second quarter of 2022.

As of ~~September 30, 2021,~~March 31, 2022, third party industry quoted NBSK list prices in Europe and North America were approximately $1,345 per ADMT and ~~$1,515~~$1,615 per ADMT, respectively and NBSK net prices in China were approximately ~~$805~~$985 per ADMT. Prices for China are net of discounts, allowances and rebates.

~~Looking ahead to~~Partially offsetting the ~~fourth quarter, we currently expect generally steady NBSK pulp demand in Europe but a weakening market in China. For hardwood pulp, we currently expect~~higher revenues was the negative ~~pricing pressure due to the incremental~~impact of inflationary pressures and global supply ~~expected to come on-line in the latter part of the fourth quarter.~~

~~With respect to~~chain challenges that increased our ~~solid wood segment, we currently expect lumber demand in the fourth quarter to remain steady in all markets, with continued modest price improvements in the U.S. market~~costs for fiber, energy and ~~downward price pressure in the European market.~~chemicals and negatively impacted production and sales

volumes in the first quarter of 2022. Such supply chain challenges resulted in our Canadian mills' being forced to temporarily slow production in the first quarter of 2022 and utilize higher cost trucking transportation as the railways work to address their backlogs.

We anticipate that the inflationary pressures and global supply chain challenges we experienced in the first quarter of 2022 will continue to impact our business in the second quarter of 2022.

While many countries globally have eased pandemic restrictions and the global roll-out of vaccines ~~is ongoing,~~continues, health and infection risks from COVID-19, ~~infections and health risks,~~ including from variants, ~~continue especially in unvaccinated populations.~~continue. Consequently, we will maintain our measures and procedures put in place to protect our people and allow us to operate our business safely and efficiently. We ~~are constantly monitoring~~will continue to monitor our operations and guidance from governmental and health organizations to ensure we take appropriate and necessary actions to protect our people. ~~To date we have not had any downtime at our mills or material disruptions to raw material supplies or access to logistics networks due to the COVID-19 pandemic.~~

	Three Months Ended September 30,						Nine Months Ended September 30,								Three Months Ended March 31,
	2021			2020			2021				2020				2022			2021
	(in thousands, other than per share amounts)													(in thousands, other than per share amounts)
Statement of Operations Data
Pulp segment revenues	$	396,743		$	274,916		$	1,046,748			$	876,567			$	485,931		$	339,756
Wood products segment revenues		70,723			57,053			232,149				144,558				101,033			70,987
Corporate and other revenues		2,280			1,182			5,401				3,820				5,777			1,977
Total revenues	$	469,746		$	333,151		$	1,284,298			$	1,024,945			$	592,741		$	412,720

Pulp segment operating income	$	99,918		$	3,753		$	138,552			$	33,302			$	86,236		$	25,296
Wood products segment operating income		18,299			11,963			88,590				21,845				40,479			27,977
Corporate and other operating loss		(4,462	)		(1,980	)		(10,522	)			(7,034	)			(4,364	)		(2,244	)
Total operating income	$	113,755		$	13,736		$	216,620			$	48,113			$	122,351		$	51,029

Pulp segment depreciation and amortization	$	29,982		$	28,251		$	84,995			$	85,841			$	27,684		$	27,046
Wood products segment depreciation and amortization		3,675			3,446			11,146				8,627				3,637			3,723
Corporate and other depreciation and amortization		658			187			1,096				563				795			198
Total depreciation and amortization	$	34,315		$	31,884		$	97,237			$	95,031			$	32,116		$	30,967

Operating EBITDA⁽¹⁾	$	148,070		$	45,620		$	313,857			$	143,144			$	154,467		$	81,996
Loss on early extinguishment of debt	$	—		$	—		$	(30,368	)	⁽²⁾	$	—			$	—		$	(30,368	)	⁽²⁾
Income tax recovery (provision)	$	(32,490	)	$	1,775		$	(45,873	)		$	(4,451	)
Net income (loss)	$	69,118		$	7,545		$	96,466			$	(4,258	)
Net income (loss) per common share
Income tax provision															$	(24,236	)	$	(2,698	)
Net income															$	88,897		$	5,933
Net income per common share
Basic	$	1.05		$	0.11		$	1.46			$	(0.06	)		$	1.35		$	0.09
Diluted	$	1.04		$	0.11		$	1.46			$	(0.06	)		$	1.34		$	0.09
Common shares outstanding at period end		66,037			65,868			66,037				65,868				66,132			65,988

	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
	2021			2020			2021			2020				2022			2021
	(in thousands)												(in thousands)
Net income (loss)	$	69,118		$	7,545		$	96,466		$	(4,258	)
Income tax provision (recovery)		32,490			(1,775	)		45,873			4,451
Net income														$	88,897		$	5,933
Income tax provision															24,236			2,698
Interest expense		16,882			19,864			53,031			60,056				17,464			19,019
Loss on early extinguishment of debt		—			—			30,368			—				—			30,368
Other income		(4,735	)		(11,898	)		(9,118	)		(12,136	)			(8,246	)		(6,989	)
Operating income		113,755			13,736			216,620			48,113				122,351			51,029
Add: Depreciation and amortization		34,315			31,884			97,237			95,031				32,116			30,967
Operating EBITDA	$	148,070		$	45,620		$	313,857		$	143,144			$	154,467		$	81,996

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2021		2020		2022		2021
Pulp Segment
Pulp production ('000 ADMTs)
NBSK		443.0		400.2		1,195.0		1,279.1		435.5		396.9
NBHK		57.8		79.8		143.9		247.6		56.8		81.6
Annual maintenance downtime ('000 ADMTs)		42.8		15.0		253.7		28.6		—		37.8
Annual maintenance downtime (days)		44		10		188		27		—		27
Pulp sales ('000 ADMTs)
NBSK		402.2		369.9		1,151.3		1,230.8		505.1		418.6
NBHK		45.7		100.1		145.1		235.4		49.9		69.0
Average NBSK pulp prices ($/ADMT)⁽¹⁾
Europe		1,345		840		1,223		841		1,330		1,037
China		832		572		892		572		899		883
North America		1,542		1,133		1,481		1,139		1,527		1,302
Average NBHK pulp prices ($/ADMT)⁽¹⁾
China		623		443		694		456		668		692
North America		1,320		868		1,212		885		1,312		1,020
Average pulp sales realizations ($/ADMT)⁽²⁾
NBSK		847		562		777		565		812		668
NBHK		684		424		604		451		695		520
Energy production ('000 MWh)⁽³⁾		464.5		529.2		1,345.6		1,670.5		531.5		519.1
Energy sales ('000 MWh)⁽³⁾		185.8		215.5		517.8		669.3		194.7		201.1
Average energy sales realizations ($/MWh)⁽³⁾		114		96		101		92		186		97

Wood Products Segment
Lumber production (MMfbm)		102.1		96.8		336.6		326.6		115.6		117.8
Lumber sales (MMfbm)		97.7		118.5		315.3		345.2		109.9		108.2
Average lumber sales realizations ($/Mfbm)		692		453		702		383		840		622
Energy production and sales ('000 MWh)		14.1		17.8		51.4		63.3		24.5		16.4
Average energy sales realizations ($/MWh)		128		125		128		118		211		129

Average Spot Currency Exchange Rates
$ / €⁽⁴⁾		1.1784		1.1698		1.1958		1.1248		1.1216		1.2045
$ / C$⁽⁴⁾		0.7937		0.7508		0.7996		0.7388		0.7897		0.7902

Consolidated – Three Months Ended ~~September 30, 2021~~March 31, 2022 Compared to Three Months Ended ~~September 30, 2020~~March 31, 2021

Total revenues ~~for~~in the ~~three months ended September 30, 2021~~first quarter of 2022 increased by approximately ~~41%~~44% to ~~$469.7~~a record $592.7 million from ~~$333.2~~$412.7 million in the same quarter of ~~2020~~2021 primarily due to higher ~~pulp and lumber~~ sales realizations, ~~partially offset~~pulp sales volumes and energy sales.

In the first quarter of 2022, our energy and chemical revenues increased by ~~lower sales volumes.~~76% to $46.2 million from $26.3 million in the same quarter of 2021 primarily as a result of higher energy prices in Germany, which were more than double those in the same quarter of 2021.

Costs and expenses in the ~~current~~first quarter of 2022 increased by approximately ~~11%~~30% to ~~$356.0~~$470.4 million from ~~$319.4~~$361.7 million in the ~~third~~first quarter of ~~2020~~2021 primarily due to higher ~~energy, maintenance and~~ per unit fiber costs, pulp sales volumes and energy, freight and chemical costs partially offset by lower ~~pulp and lumber sales volumes.~~maintenance costs.

In the ~~third~~first quarter of ~~2021,~~2022, cost of sales depreciation and amortization increased to ~~$34.3~~$32.1 million from ~~$31.9~~$30.9 million in the same quarter of ~~2020 primarily~~2021 due to the completion of capital ~~projects and the negative impact of a weaker dollar on our Canadian dollar and euro denominated depreciation expense.~~projects.

Selling, general and administrative expenses increased to ~~$19.5~~$22.2 million in the ~~third~~first quarter of ~~2021~~2022 from ~~$15.4~~$20.5 million in the same quarter of ~~2020.~~2021 primarily due to higher employee compensation.

In the ~~third~~first quarter of ~~2021,~~2022, our operating income increased to ~~a record $113.8~~$122.4 million from ~~$13.7~~$51.0 million in the same quarter of ~~2020~~2021 primarily due to higher ~~pulp and lumber~~ sales realizations and pulp sales volumes and lower maintenance costs partially offset by higher ~~energy, maintenance and~~ per unit fiber costs and higher energy, freight and chemical costs.

In January 2021, we refinanced (the “Refinancing”) a significant portion of our debt by issuing $875.0 million of 5.125% senior notes due 2029 (the “2029 Senior Notes”) and using the proceeds to redeem and/or repurchase all of our 6.5% 2024 Senior Notes and our 7.375% 2025 Senior Notes at a cost including premium of $824.6 million (the “Redemption”). We recorded a loss on such Redemption of $30.4 million (being $0.46 per share).

Interest expense in the ~~current~~first quarter of 2022 decreased to ~~$16.9~~$17.5 million from ~~$19.9~~$19.0 million in the same quarter of ~~2020~~2021 primarily as a result of a lower ~~weighted average~~ interest ~~rate.~~rate for our 2029 Senior Notes.

In the ~~third~~first quarter of ~~2021,~~2022, other income ~~decreased~~increased to ~~$4.7~~$8.2 million from ~~$11.9~~$7.0 million in the same quarter of ~~2020. Other income in the current quarter is~~2021 primarily ~~related~~due to foreign exchange ~~gains on U.S. dollar denominated cash balances. Other income in the same quarter of the prior year includes $15.4 million realized gains~~ on the ~~sale~~translation of ~~investments.~~intercompany loans.

During the ~~third~~first quarter of ~~2021, the~~2022, we had an income tax provision ~~for income taxes was $32.5~~of $24.2 million or an effective tax rate of ~~approximately 32%.~~ 21% due to taxable income in entities that have a full valuation allowance against their loss carryforwards.In the comparative quarter of ~~2020,~~2021, we had ~~a recovery for income taxes of $1.8 million primarily due to the~~an income tax ~~recoveries for our Canadian operations only partially offset by the~~provision of $2.7 million or an effective tax ~~provision for our German operations.~~rate of 31%.

For the ~~third~~first quarter of ~~2021,~~2022, our net income was ~~$69.1~~$88.9 million, or ~~$1.05~~$1.35 per basic share and ~~$1.04~~$1.34 per diluted share, compared to ~~$7.5~~net income of $5.9 million, or ~~$0.11~~$0.09 per share, inafter giving effect to the ~~same quarter~~loss on the Redemption of ~~2020.~~

~~In the third quarter of 2021, Operating EBITDA increased to a record $148.1 million from $45.6~~$30.4 million, in the same quarter of ~~2020~~2021.

In the first quarter of 2022, Operating EBITDA increased by approximately 88% to $154.5 million from $82.0 million in the same quarter of 2021 primarily due to higher ~~pulp and lumber~~ sales realizations and pulp sales volumes and lower maintenance costs partially offset by ~~certain~~ higher per unit fiber costs and other production costs.

None of the income or loss items following operating income in our Interim Consolidated Statements of Operations are allocated to our segments, since those items are reviewed separately by management.

Pulp Segment – Three Months Ended ~~September 30, 2021~~March 31, 2022 Compared to Three Months Ended ~~September 30, 2020~~March 31, 2021

	Three Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2022		2021
	(in thousands)				(in thousands)
Pulp revenues	$	374,287	$	253,056	$	446,911	$	317,582
Energy and chemical revenues	$	22,456	$	21,860	$	39,020	$	22,174
Depreciation and amortization	$	29,982	$	28,251	$	27,684	$	27,046
Operating income	$	99,918	$	3,753	$	86,236	$	25,296

Pulp revenues in the ~~third~~first quarter of ~~2021~~2022 increased by approximately ~~48%~~41% to ~~$374.3~~a record $446.9 million from ~~$253.1~~$317.6 million in the same quarter of ~~2020~~2021 due to higher sales realizations ~~partially offset by lower~~and sales ~~volumes due to delays in certain product shipments.~~volumes.

Energy and chemical revenues increased by approximately 3%76% to ~~$22.5~~a record $39.0 million in the ~~third~~first quarter of ~~2021~~2022 from ~~$21.9~~$22.2 million in the same quarter of ~~2020~~2021 primarily due to a higher ~~realized~~ sales ~~price partially offset by a lower sales volume primarily at the Rosenthal mill.~~realizations. During the current quarter of 2022, we benefitted from strong energy demand and higher ~~sales for some of our~~ energy ~~on the spot market. Our Rosenthal mill’s turbine was taken down~~prices in ~~the third quarter of 2021~~Germany.

Total pulp production increased by approximately 3% to ~~complete extensive repair work which will continue into~~492,288 ADMTs in the first quarter of 2022 ~~and has resulted~~from 478,499 ADMTs in the ~~mill purchasing replacement energy.~~same quarter of 2021 primarily due to lower annual maintenance downtime partially offset by lower

production at our Canadian mills as they slowed production as a result of railcar shortages disrupting shipping pulp from the mills. In the first quarter of 2022, we had no annual maintenance downtime. In the comparative quarter of 2021, we had annual maintenance downtime at our Celgar mill of 27 days (approximately 37,800 ADMTs).

In the second quarter of 2022, our pulp mills currently have 39 days of planned annual maintenance downtime (approximately 51,000 ADMTs).

Total pulp ~~production~~sales volumes increased by approximately 4%14% to ~~500,866~~555,035 ADMTs in the ~~current~~first quarter of 2022 from ~~479,993~~487,678 ADMTs in the same quarter of ~~2020~~2021 primarily due to ~~higher production at~~ the ~~Celgar mill. In the current quarter~~timing of 2021, our pulp mills had 44 days of maintenance downtime (approximately 42,800 ADMTs) including our 50% owned Cariboo mill. In the comparative quarter of 2020, our pulp mills had ten days of annual maintenance downtime (approximately 15,000 ADMTs)shipments and ~~our Celgar mill had 30 days of market related downtime.~~

We estimate that annual maintenance downtime in the current quarter adversely impacted our operating income by approximately $14.9 million, comprised of approximately $8.6 million in direct out-of-pocket expenses and the balance in reducedhigher production.

In the ~~fourth~~first quarter of ~~2021, our pulp mills currently have no planned annual maintenance downtime.~~

~~Total pulp sales volumes decreasedby approximately 5% to 447,960 ADMTs in the current quarter from 469,998 ADMTs in the same quarter of 2020 primarily due to delays in certain shipments.~~

~~In the current quarter of 2021,~~2022, third party industry quoted average list prices for NBSK pulp increased from the same quarter of ~~2020 largely~~2021 primarily as a result of ~~strong demand and~~ low customer inventory ~~levels. In the current quarter, average~~levels and global logistics issues restricting supply.

Average third party industry quoted list prices for NBSK pulp in Europe and North America were approximately ~~$1,345~~$1,330 per ADMT and ~~$1,542~~$1,527 per ADMT, respectively in the first quarter of 2022 compared to approximately ~~$840~~$1,037 per ADMT and ~~$1,133~~$1,302 per ADMT, respectively, in the same quarter of ~~2020.~~2021. Average third party industry quoted NBSK net prices in China were approximately ~~$832~~$899 per ADMT in the ~~current~~first quarter of 2022 compared to approximately ~~$572~~$883 per ADMT in the same quarter of ~~2020.~~2021.

~~Average~~Prices quoted for China are net of discounts, allowances and rebates whereas quoted prices for Europe and North America are before applicable discounts, allowances and rebates.

Our average NBSK pulp sales realizations increased by approximately ~~51%~~22% to ~~$847~~$812 per ADMT in the ~~third~~first quarter of ~~2021~~2022 from approximately ~~$562~~$668 per ADMT in the same quarter of ~~2020.~~2021.

In the ~~current~~first quarter of 2022 compared to the same quarter of 2021, primarily as a result of the effect of the ~~weaker~~stronger dollar on our ~~Canadian dollar and~~ euro denominated costs and expenses, we had a ~~negative~~positive impact of approximately ~~$2.7~~$9.5 million in operating income due to foreign ~~exchange compared to the same quarter of 2020.~~exchange.

Costs and expenses in the ~~current~~first quarter of 2022 increased by approximately 9%27% to ~~$296.9~~$399.7 million from ~~$271.2~~$314.6 million in the ~~third~~first quarter of ~~2020~~2021 primarily due to higher pulp sales volumes, per unit fiber costs and energy, chemical and ~~maintenance~~freight costs partially offset by lower ~~pulp sales volumes.~~maintenance costs.

~~On average, in~~In the ~~current~~first quarter ~~overall~~of 2022 per unit fiber costs ~~were flat when compared to~~increased by approximately 25% from the same quarter of ~~2020. In the current quarter,~~2021 due to higher per unit fiber costs for all of our mills. Per unit fiber costs for our German mills ~~declined~~increased due to ~~the~~strong demand and reduced availability of lower cost beetle damaged wood. For our Canadian mills, per unit fiber costs increased due to strong demand in the ~~higher usage of more expensive softwood chips. In the fourth quarter of 2021, we~~mills' fiber baskets. We currently expect per unit fiber costs ~~for our pulp mills to~~will increase in the second quarter of 2022 due to ~~lower wood chip availability.~~continued strong demand.

Transportation costs ~~for our pulp segment were generally flat at $33.4~~increased by approximately 32% to $47.9 million in the ~~current~~first quarter of 2022 from ~~$32.6~~$36.2 million in the same quarter of ~~2020 despite the negative impact~~2021 primarily as a result of ~~a weaker dollar on freight costs~~increased use of higher cost trucking and higher freight ~~rates.~~rates and sales volumes.

In the ~~third~~first quarter of ~~2021,~~2022, depreciation and amortization increased to ~~$30.0~~$27.7 million from ~~$28.3~~$27.0 million in the same quarter of ~~2020~~2021 due to the completion of capital ~~projects and the negative impact of a weaker dollar.~~projects.

In the ~~third~~first quarter of ~~2021,~~2022, pulp segment operating income increased to ~~a record $99.9~~$86.2 million from ~~$3.8~~$25.3 million in the same quarter of ~~2020~~2021 as higher ~~pulp~~ sales realizations and lower maintenance costs were ~~only~~ partially offset by higher ~~energy~~per unit fiber costs and ~~maintenance~~other production costs.

Wood Products Segment – Three Months Ended ~~September 30, 2021~~March 31, 2022 Compared to Three Months Ended ~~September 30, 2020~~March 31, 2021

	Three Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2022		2021
	(in thousands)				(in thousands)
Lumber revenues	$	67,605	$	53,612	$	92,366	$	67,311
Energy revenues	$	1,801	$	2,226	$	5,177	$	2,114
Wood residual revenues	$	1,317	$	1,215	$	3,490	$	1,562
Depreciation and amortization	$	3,675	$	3,446	$	3,637	$	3,723
Operating income	$	18,299	$	11,963	$	40,479	$	27,977

In the ~~third~~first quarter of ~~2021,~~2022, lumber revenues increased by approximately ~~26%~~37% to ~~$67.6~~a record $92.4 million from ~~$53.6~~$67.3 million in the same quarter of ~~2020~~2021 primarily due to higher sales ~~realizations partially offset by lower sales volumes. Early in~~realizations. In the ~~third~~first quarter of ~~2021, the~~2022, both European and U.S. ~~market~~demand was ~~historically strong but prices declined sharply later in the quarter. The European market was generally strong through the quarter.~~strong. The U.S. market accounted for approximately ~~40%~~59% of our lumber revenues and ~~approximately 39%~~42% of our lumber sales volumes. ~~The majority of our remaining sales were to Europe.~~

~~Energy and wood residual revenues in the third quarter of 2021 decreased by approximately 9% to $3.1 million from $3.4 million in the same quarter of 2020 primarily due to lower energy production.~~

~~Lumber production increased by approximately 5% to 102.1 MMfbm in the current quarter of 2021 from 96.8 MMfbm in the same quarter of 2020 primarily due to capital improvements.~~

~~Lumber sales volumes decreased by approximately 18% to 97.7 MMfbm in the current quarter of 2021 from 118.5 MMfbm in the same quarter of 2020 primarily due to shipping delays.~~

Average lumber sales realizations increased by approximately 53% to $692 per Mfbm in the third quarter of 2021 from approximately $453 per Mfbm in the same quarter of 2020 primarily due to higher pricing in both the U.S. and European markets. U.S. lumber pricing increased due to strong housing demand early in the quarter. European lumber pricing increased due to steady demand and reduced supply as producers shifted product to the U.S. market.

Fiber costs were approximately 75% of our lumber cash production costs in the current quarter. In the comparative quarter of 2020, per unit fiber costs were low as a result of a large supply of beetle damaged wood. As producers have been working through such wood, more green wood is being harvested. As a result of utilizing more green wood and continuing strong sawlog demand, current quarter per unit fiber costs increased by approximately 74% from the same quarter of 2020. We currently expect modestly increasing per unit fiber costs in the fourth quarter of 2021.

~~In the third quarter of 2021, depreciation and amortization increased to $3.7 million from $3.4 million in the same quarter of 2020 primarily due to the completion of capital projects.~~

Transportation costs for our wood products segment were flat at $7.9 million in the current quarter from $8.0 million in the same quarter of 2020 primarily as a result of lower sales volumes generally being offset by higher freight costs.

In the third quarter of 2021, our wood products segment operating income increased by approximately 53% to $18.3 million from $12.0 million in the same quarter of 2020 primarily due to a higher lumber realized sales price partially offset by higher per unit fiber costs.

~~Consolidated – Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020~~

Total revenues for the nine months ended September 30, 2021 increased by approximately 25% to $1,284.3 million from $1,024.9 million in the nine months ended September 30, 2020 primarily due to higher pulp and lumber sales realizations partially offset by lower pulp, energy and lumber sales volumes.

Costs and expenses in the nine months ended September 30, 2021 increased by approximately 9% to $1,067.7 million from $976.8 million in the nine months ended September 30, 2020 primarily due to higher maintenance and energy costs and the negative impact of a weaker dollar on our Canadian dollar and euro denominated costs and expenses partially offset by lower sales volumes and per unit fiber costs.

In the nine months ended September 30, 2021, cost of sales depreciation and amortization increased to $97.2 million from $95.0 million in the same period of 2020 due to the completion of capital projects.

Selling, general and administrative expenses increased by approximately 22% to $60.3 million in the nine months ended September 30, 2021 from $49.3 million in the same period of 2020 primarily due to higher employee compensation and the negative impact of a weaker dollar.

In the nine months ended September 30, 2021, operating income increased to $216.6 million from $48.1 million in the same period of 2020 primarily due to higher pulp and lumber sales realizations and lower per unit fiber costs partially offset by higher maintenance and energy costs, the negative impact of a weaker dollar and lower sales volumes.

In January 2021, we refinanced (the “Refinancing”) a significant portion of our debt by issuing $875.0 million of 5.125% senior notes due 2029 (the “2029 Senior Notes”) and used the proceeds to redeem and/or repurchase all of our 6.5% 2024 Senior Notes and 7.375% 2025 Senior Notes at a cost including premium of $824.6 million (the “Redemption”). We recorded a loss on such Redemption of $30.4 million ($0.46 per share). The Refinancing reduced our annual interest expense going forward by approximately $12 million.

~~Interest expense in the nine months ended September 30, 2021 decreased to $53.0 million from $60.1 million in the same period of 2020 primarily as a result of a lower interest rate~~ ~~for our 2029 Senior Notes~~.

Other income in the nine months ended September 30, 2021 was $9.1 million compared to $12.1 million in the same period of 2020. Other income in the nine months ended September 30, 2021 was primarily due to foreign exchange gains on U.S. dollar denominated cash balances. Other income in the nine months ended September 30, 2020 was primarily due to $15.4 million of realized gains on the sale of investments.

In the nine months ended September 30, 2021, the provision for income taxes was $45.9 million or an effective tax rate of approximately 32%. In the nine months ended September 30, 2020, the provision for income taxes was $4.5 million primarily due to the tax provision for our German operations being partially offset by tax recoveries for our Canadian operations.

~~For the nine months ended September 30, 2021, our net income was $96.5 million, or $1.46 per share compared to a net loss of $4.3 million, or $0.06 per share, in the same period of 2020.~~

In the nine months ended September 30, 2021, Operating EBITDA increased to $313.9 million from $143.1 million in the same period of 2020 primarily due to higher pulp and lumber sales realizations and lower per unit fiber costs partially offset by higher maintenance and energy costs, the negative impact of a weaker dollar and lower sales volumes.

~~Pulp Segment – Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020~~

Pulp revenues in the nine months ended September 30, 2021 increased by approximately 22% to $989.1 million from $808.9 million in the same period of 2020 due to higher sales realizations partially offset by lower sales volumes.

Energy and chemical revenues decreased by approximately 15% to $57.7 million in the nine months ended September 30, 2021 from $67.6 million in the same period of 2020 primarily due to lower energy production as a result of annual maintenance downtime and required work and repairs on our Rosenthal mill's turbine.

Total pulp production declined by approximately 12% to 1,338,918 ADMTs in the nine months ended September 30, 2021 from 1,526,717 ADMTs in the same period of 2020. In the current period, our pulp mills had 188 days of annual maintenance downtime (approximately 253,700 ADMTs) including our 50% owned Cariboo mill. Approximately 88 days of such downtime was at our Peace River mill and primarily related to boiler work which was deferred from last year. In the nine months ended September 30, 2021, we received insurance proceeds of $21.6 million in connection with the costs of the Peace River mill boiler work and an initial payment of $4.2 million for our business interruption insurance claims. We currently expect our remaining business interruption insurance claim to be in excess of $15 million.

We estimate that annual maintenance downtime in the nine months ended September 30, 2021 adversely impacted our operating income by approximately $125.3 million, comprised of approximately $75.4 million in direct out-of-pocket expenses and the balance in reduced production (exclusive of business interruption insurance proceeds).

~~Total pulp sales volumes decreasedby approximately 12% to 1,296,406 ADMTs in the nine months ended September 30, 2021 from 1,466,263 ADMTs in the same period of 2020 primarily due to lower production.~~

In the nine months ended September 30, 2021, prices for NBSK pulp increased from the same period of 2020, largely as a result of strong demand and low customer inventory levels. In the current period, average list prices for NBSK pulp in Europe and North America were approximately $1,223 per ADMT and $1,481 per ADMT, compared to approximately $841 per ADMT and $1,139 per ADMT, respectively, in the nine months ended September 30, 2020. In the current period, average NBSK net prices in China were approximately $892 per ADMT compared to approximately $572 per ADMT in the nine months ended September 30, 2020.

~~Average NBSK pulp sales realizations increased by approximately 38% to $777 per ADMT in the nine months ended September 30, 2021 from approximately $565 per ADMT in the same period of 2020.~~

In the nine months ended September 30, 2021, primarily as a result of the effect of the weakening dollar on our Canadian dollar and euro denominated costs and expenses, we had a negative impact of approximately $57.4 million in operating income due to foreign exchange compared to the same period of 2020.

Costs and expenses in the nine months ended September 30, 2021 increased by approximately 8% to $908.4 million from $843.7 million in the nine months ended September 30, 2020 primarily due to higher maintenance and energy costs and the negative impact of a weaker dollar partially offset by lower pulp sales volumes and per unit fiber costs.

On average, in the nine months ended September 30, 2021 overall per unit fiber costs decreased by approximately 4% from the same period of 2020. In the nine months ended September 30, 2021, per unit fiber costs for our German

~~mills declined due to the continued availability of beetle damaged wood. For our Canadian mills, per unit fiber costs were flat compared to the same period of 2020.~~

Transportation costs for our pulp segment decreased to $94.5 million in the nine months ended September 30, 2021 from $102.8 million in the same period of 2020 primarily as a result of lower sales volumes.

~~In the nine months ended September 30, 2021, depreciation and amortization decreased to $85.0 million from $85.8 million in the same period of 2020.~~

In the nine months ended September 30, 2021, pulp segment operating income increased to $138.6 million from $33.3 million in the same period of 2020 as higher pulp sales realizations and lower per unit fiber costs were only partially offset by higher maintenance and energy costs, the negative impact of a weaker dollar and lower pulp and energy sales volumes.

~~Wood Products Segment – Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020~~

In the nine months ended September 30, 2021, lumber revenues increased by approximately 67% to $221.2 million from $132.2 million in the same period of 2020 primarily due to a higher realized sales price partially offset by a lower sales volume. Overall, in the nine months ended September 30, 2021, U.S. markets were strong with approximately 57% of our lumber revenues and 41% of sales volumes to such market. The majority of the balance of our lumber sales were to Europe.

Energy and wood residual revenues ~~decreased by approximately 11% to $10.9 million~~ in the ~~nine months ended September 30, 2021~~first quarter of 2022 increased to a record $8.7 million from ~~$12.3~~$3.7 million in the same ~~period~~quarter of ~~2020~~2021 primarily due to ~~lower~~higher sales ~~realizations for wood residuals.~~ realizations. Increased energy sales in the current quarter were driven by strong demand and higher energy prices in Germany.

Lumber production ~~increased by approximately 3%~~modestly decreased to ~~336.6~~115.6 MMfbm in the ~~nine months ended September 30, 2021~~first quarter of 2022 from ~~326.6~~117.8 MMfbm in the same ~~period~~quarter of ~~2020 primarily due to capital improvements.~~2021.

Lumber sales volumes ~~decreased by approximately 9%~~modestly increased to ~~315.3~~109.9 MMfbm in the ~~nine months ended September 30, 2021~~first quarter of 2022 from ~~345.2~~108.2 MMfbm in the same ~~period~~quarter of ~~2020 primarily due to shipping delays.~~2021.

Average lumber sales realizations increased by approximately 35% to ~~$702~~$840 per Mfbm in the ~~nine months ended September 30, 2021~~first quarter of 2022 from approximately ~~$383~~$622 per Mfbm in the same ~~period~~quarter of ~~2020~~2021 primarily due to higher pricing in both the ~~U.S.~~European and ~~European~~U.S. markets. U.S. lumber pricing increased due to strong demand from the housing and ~~home improvement demand.~~renovation markets. European lumber pricing increased due to steady demand ~~and reduced supply as producers shifted product to the U.S. market.~~with limited supply.

Fiber costs were approximately ~~75%~~80% of our lumber cash production costs in the ~~nine months ended September 30, 2021.~~first quarter of 2022. In the comparative ~~period~~quarter of ~~2020,~~2021, per unit fiber costs were ~~very low~~lower as a result of a large supply of beetle damaged wood. As producers have ~~been working~~worked through such wood, more green wood is being harvested. In the ~~nine months ended September 30, 2021~~first quarter of 2022 per unit fiber costs increased by approximately ~~34%~~56% from the same ~~period~~quarter of ~~2020~~2021 as a result of using more green wood and continued strong demand for ~~sawlogs and the negative impact of a weaker dollar on our euro denominated~~sawlogs. We currently expect modestly higher per unit fiber ~~costs.~~

~~Transportation~~ costs ~~for our wood products segment~~ in the ~~nine months ended September 30, 2021 increased by approximately 9%~~second quarter of 2022.

In the first quarter of 2022, depreciation and amortization was flat at $3.6 million compared to ~~$24.0 million from $22.0~~$3.7 million in the same ~~period~~quarter of ~~2020~~2021.

Transportation costs in the first quarter of 2022 increased by approximately 39% to $11.0 million from $7.9 million in the same quarter of 2021 primarily due to higher freight ~~rates and the negative impact of a weaker dollar being only partially offset by lower sales volumes.~~rates.

In the ~~nine months ended September 30, 2021, depreciation and amortization increased to $11.1 million from $8.6 million in the same period~~first quarter of ~~2020 primarily due to the completion of capital projects.~~

~~In the nine months ended September 30, 2021,~~2022, our wood products segment had operating income of ~~$88.6~~$40.5 million compared to ~~$21.8~~$28.0 million in the same ~~period~~quarter of ~~2020~~2021 primarily due to a higher ~~lumber realized~~ sales ~~price~~realizations partially offset by higher per unit fiber costs.

	Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2022			2021
	(in thousands)						(in thousands)
Net cash from operating activities	$	151,584		$	22,751		$	68,810		$	30,288
Net cash used in investing activities		(154,277	)		(46,345	)		(26,790	)		(26,297	)
Net cash from (used in) financing activities		(19,039	)		18,438
Net cash from financing activities								24,609			31,412
Effect of exchange rate changes on cash and cash equivalents		(636	)		(349	)		(1,534	)		(1,418	)
Net decrease in cash and cash equivalents	$	(22,368	)	$	(5,505	)
Net increase in cash and cash equivalents							$	65,095		$	33,985

We operate in a cyclical industry and our operating cash flows vary accordingly. Our principal operating cash expenditures are for fiber, labor and chemicals. Working capital levels fluctuate throughout the year and are affected by maintenance downtime, changing sales patterns, seasonality and the timing of receivables and sales and the payment of payables and expenses.

Cash Flows from Operating Activities. Cash provided by operating activities was ~~$151.6~~$68.8 million in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$22.8~~$30.3 million in the comparative period of ~~2020.~~2021. An increase in accounts receivable used cash of ~~$27.5~~$52.1 million in the ~~current period~~first quarter of 2022 compared to ~~decrease in accounts receivable providing cash of $11.2~~$12.4 million in the same ~~period~~quarter of ~~2020.~~2021. An increase in inventories used cash of ~~$82.3~~$1.7 million in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$20.4~~$20.8 million in the same period of ~~2020. An~~2021. A decrease in accounts payable and accrued expenses used cash of $0.6 million in the three months ended March 31, 2022 compared to an increase in accounts payable and accrued expenses ~~provided~~providing cash of ~~$46.8 million in the current period compared to a decrease in accounts payable and accrued expenses using cash of $54.0~~$4.4 million in the same period of ~~2020.~~2021.

Cash Flows from Investing Activities. Investing activities in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 used cash of ~~$154.3~~$26.8 million ~~comprised~~ primarily ofrelated to capital expenditures of ~~$125.7 million and $51.3 million for~~$33.3 million. In the ~~acquisition~~first quarter of ~~our CLT facility in Spokane. Capital~~2022, capital expenditures primarily related ~~primarily~~ to ~~the Peace River recovery boiler rebuild, which was financed with insurance proceeds of $21.6 million, capacity expansion projects at the Stendal mill,~~ upgrades to the woodrooms at our Canadian ~~pulp~~ mills and ~~the substantial completion of the Phase II expansion and~~ optimization ~~project~~projects at our ~~Friesau sawmill.~~German mills. In the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2022, we received the final payment of $6.4 million of insurance proceeds for our property damage claim related to the Peace River recovery boiler. In the three months ended March 31, 2021, investing activities usedcash of ~~$46.3~~$26.3 million primarily related to capital expenditures of ~~$59.2 million and $9.4 million for other investments partially offset by proceeds of $21.5 million from the sale of such investments.~~$25.3 million.

Cash Flows from Financing Activities. In the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, financing activities ~~used~~provided cash of ~~$19.0~~$24.6 million. In the ~~current period,~~first quarter of 2022, we ~~repaid $53.1~~borrowed $30.5 million ofunder our revolving credit facilities, received net proceeds from the Refinancing after giving effect to the Redemption of $50.4 million, paid note issuance costs of $14.5 million in respect of the 2029 Senior Notes and paid $8.6 million of dividends.facilities. In the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we received ~~$8.9~~$1.1 million in government grants to partially finance innovation and greenhouse gas emission reduction capital projects at our Canadian mills. In the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, financing activities provided cash of ~~$18.4~~$31.4 million primarily from ~~$34.4~~the net proceeds of the Refinancing after giving effect to the Redemption. In the first quarter of 2021, we paid note issuance costs of $14.4 million related to the issuance of the 2029 Senior Notes and repaid $15.1 million of borrowings under our revolving credit facilities. In the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021, we ~~paid dividends of $13.3~~received $8.5 million in government grants to partially finance innovation and ~~used $0.2 million to repurchase common shares.~~greenhouse gas emission reduction capital projects at our Canadian mills.

The following table is a summary of selected financial information as of the dates indicated:

	September 30,		December 31,		March 31,		December 31,
	2021		2020		2022		2021
	(in thousands)				(in thousands)
Cash and cash equivalents	$	338,730	$	361,098	$	410,705	$	345,610
Working capital	$	695,785	$	663,056	$	888,201	$	781,181
Total assets	$	2,231,753	$	2,129,126	$	2,456,944	$	2,351,232
Long-term liabilities	$	1,347,426	$	1,316,303	$	1,407,426	$	1,374,084
Total shareholders' equity	$	627,836	$	601,027	$	768,334	$	694,024

Our principal sources of funds are cash flows from operations and cash and cash equivalents on hand. Our principal uses of funds consist of operating expenditures, capital expenditures and interest payments on our senior notes.

The following table sets out our total capital expenditures and interest expense for the periods indicated:

	Nine Months Ended September 30,					Three Months Ended March 31,
	2021			2020		2022		2021
	(in thousands)					(in thousands)
Capital expenditures	$	125,692	⁽¹⁾	$	59,201	$	33,293	$	25,262
Cash paid for interest expense⁽²⁾⁽¹⁾	$	72,205		$	76,257	$	32,073	$	39,026
Interest expense⁽³⁾⁽²⁾	$	53,031		$	60,056	$	17,464	$	19,019

As of ~~September 30, 2021,~~March 31, 2022, we had cash and cash equivalents of ~~$338.7~~$410.7 million and approximately ~~$308.2~~$281.0 million available under our revolving credit facilities ~~providing us with~~and as a result aggregate liquidity of about ~~$646.9 million.~~

In 2021, we have continued to implement capital projects designed to deliver high returns and help us achieve our ESG objectives. These included the expansion of our Stendal mill's pulp and green energy production capacity and new woodroom projects at our Celgar and Peace River mills. Currently we expect our 2021 capital expenditures will be approximately $150$691.7 million.

We currently consider the majority of undistributed earnings of our foreign subsidiaries to be indefinitely reinvested and, accordingly, no U.S. income tax has been provided on such earnings. However, if we were required to repatriate funds to the United States, we believe that we currently could repatriate the majority thereof without incurring any material amount of taxes as a result of our shareholder advances and U.S. tax reform. However, it is currently not practical to estimate the income tax liability that might be incurred if such earnings were remitted to the United States. Substantially all of our undistributed earnings are held by our foreign subsidiaries outside of the United States.

Based upon the current level of operations and our current expectations for future periods in light of the current economic environment, and in particular, current and expected pulp and lumber pricing and foreign exchange rates, we believe that cash flow from operations and available cash, together with available borrowings under our revolving credit facilities, will be adequate to finance the capital requirements for our business including the payment of our quarterly dividend during the next 12 months.

In the future we may make acquisitions of businesses or assets or commitments to additional capital projects. To achieve the long-term goals of expanding our assets and earnings, including through acquisitions, capital resources will be required. Depending on the size of a transaction, the capital resources that will be required can be substantial. The necessary resources will be generated from cash flow from operations, cash on hand, borrowing against our assets or the issuance of securities.

Certain of our long-term obligations contain various financial tests and covenants customary to these types of arrangements. See our annual report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

As of ~~September 30, 2021,~~March 31, 2022, we were in full compliance with all of the covenants of our indebtedness.

As of ~~September 30, 2021,~~March 31, 2022, we did not have any off-balance sheet arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K).

There were no material changes outside the ordinary course to any of our material contractual obligations during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

As a majority of our assets, liabilities and expenditures are held or denominated in euros or Canadian dollars, our consolidated financial results are subject to foreign currency exchange rate fluctuations.

We translate foreign denominated assets and liabilities into dollars at the rate of exchange on the balance sheet date. Equity accounts are translated using historical exchange rates. Unrealized gains or losses from these translations are recorded in other comprehensive ~~income (loss)~~loss and do not affect our net earnings.

As a result of the strengthening of the dollar versus the euro as of ~~September 30, 2021,~~March 31, 2022, we recorded a net non-cash decrease of ~~$59.7~~$10.5 million in the carrying value of our net assets, consisting primarily of our fixed assets denominated in euros. This non-cash decrease does not affect our net income, ~~(loss),~~ Operating EBITDA or cash but is reflected in our other comprehensive ~~income (loss)~~loss and as a decrease to our total equity. As a result, our accumulated other comprehensive loss increased to ~~$86.9~~$101.4 million.

Based upon the exchange rate as of ~~September 30, 2021,~~March 31, 2022, the dollar has strengthened by approximately 6%2% against the euro and ~~was flat~~has weakened by approximately 1% against the Canadian dollar since December 31, ~~2020.~~2021. See "Quantitative and Qualitative Disclosures about Market Risk".

~~We and our Senior Notes are rated by Standard & Poor's Rating Services, referred to as "S&P", and Moody's Investors Service, Inc., referred to as "Moody's".~~

~~In June 2021, S&P revised its outlook to stable from negative and confirmed its rating on our senior Notes is B+. Its recovery rating remained unchanged at~~ “3”. Credit ratings are not recommendations to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organization. Each rating should be evaluated independently of any other rating.

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect both the amount and the timing of the recording of assets, liabilities, revenues, and expenses in the consolidated financial statements and accompanying note disclosures. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. As the number of variables and assumptions affecting the probable future resolution of the uncertainties increases, these judgments become even more subjective and complex.

Our significant accounting policies are disclosed in Note 1 to our audited annual financial statements included in our annual report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. While all of the significant accounting policies are important to the consolidated financial statements, some of these policies may be viewed as having a high degree of judgment. On an ongoing basis using currently available information, management reviews its estimates, including those related to accounting for, among other things, pension and other post-retirement benefit

obligations, deferred income taxes (valuation allowance and permanent reinvestment), depreciation and amortization, future cash flows associated with impairment testing for long-lived assets, the allocation of the purchase price ~~for~~in a ~~group of assets or a~~ business combination to the assets acquired and liabilities assumed, legal liabilities and contingencies. Actual results could differ materially from these estimates, and changes in these estimates are recorded when known.

We have identified certain accounting policies that are the most important to the portrayal of our current financial condition and results of operations.

For information about both our significant and critical accounting policies, see our annual report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

The statements in this report that are not reported financial results or other historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended.

Generally, forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", or words of similar meaning, or future or conditional verbs, such as "will", "should", "could", or "may", although not all forward-looking statements contain these identifying words. Forward-looking statements are based on expectations, forecasts and assumptions by our management and involve a number of risks, uncertainties and other factors, many of which are beyond our control, that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. These factors include, but are not limited to, the following:

Given these uncertainties, you should not place undue reliance on our forward-looking statements. The foregoing review of important factors is not exhaustive or necessarily in order of importance and should be read in conjunction with the risks and assumptions including those set forth under "Part II. Other Information – Item 1A. Risk Factors" and in reports and other documents we have filed with or furnished to the SEC, including in our annual report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.

The pulp and lumber businesses are highly cyclical in nature and markets are characterized by periods of supply and demand imbalance, which in turn can materially affect prices. Pulp and lumber markets are sensitive to cyclical changes in the global economy, industry capacity and foreign exchange rates, all of which can have a significant influence on selling prices and our operating results. The length and magnitude of industry cycles have varied over time but generally reflect changes in macro-economic conditions and levels of industry capacity. Pulp and lumber are commodities that are generally available from other producers. Because commodity products have few distinguishing qualities from producer to producer, competition is generally based upon price, which is generally determined by supply relative to demand.

Industry capacity can fluctuate as changing industry conditions can influence producers to idle production capacity or permanently close mills. In addition, to avoid substantial cash costs in idling or closing a mill, some producers will choose to operate at a loss, sometimes even a cash loss, which can prolong weak pricing environments due to oversupply. Oversupply of our products can also result from producers introducing new capacity in response to favorable pricing trends. Certain integrated pulp and paper producers have the ability to discontinue paper production by idling their paper machines and selling their pulp production on the market, if market conditions, prices and trends warrant such actions.

Demand for each of pulp and lumber has historically been determined primarily by general global macro-economic conditions and has been closely tied to overall business activity. Pulp prices have been and are likely to continue to be volatile and can fluctuate widely over time. ~~Between 2011 and 2021,~~The third party industry quoted average European list prices for NBSK pulp between 2012 and 2022 have fluctuated between a low of ~~approximately~~ $760 per ADMT in 2012 to a high of $1,345 per ADMT in 2021. In the same period, ~~the~~third party industry quoted average North American list prices for NBHK ~~price has~~pulp have fluctuated between a low of $700 per ADMT in 2012 to a high of ~~$1,350~~$1,390 per ADMT in ~~2021.~~2022.

Our mills and operations voluntarily subject themselves to third-party certification as to compliance with internationally recognized, sustainable management standards because end use paper and lumber customers have shown an increased interest in understanding the origin of products they purchase. Demand for our products could be adversely affected if we, or our suppliers, are unable to achieve compliance, or are perceived by the public as failing to comply, with these standards or if our customers require compliance with alternate standards for which our operations are not certified.

A pulp producer's actual sales price realizations are net of customer discounts, rebates and other selling concessions.

Accordingly, prices for pulp and lumber are driven by many factors outside our control, and we have little influence over the timing and extent of price changes, which are often volatile. Because market conditions beyond our control determine the prices for pulp and lumber, prices may fall below our cash production costs, requiring us to either incur short-term losses on product sales or cease production at one or more of our mills. Therefore, our profitability depends on managing our cost structure, particularly raw materials which represent a significant component of our operating costs and can fluctuate based upon factors beyond our control. If the prices of our products decline, or if prices for our raw materials increase, or both, our results of operations and cash flows could be materially adversely affected.

Our production costs are influenced by the availability and cost of raw materials, energy and labor, and our plant efficiencies and productivity. Our main raw material is fiber in the form of wood chips, pulp logs and sawlogs. Wood chip, pulp log and sawlog costs are primarily affected by the supply of, and demand for, lumber and pulp, which are both highly cyclical. Higher fiber prices could affect producer profit margins if they are unable to pass along price increases to pulp and lumber customers or purchasers of surplus energy.

We have manufacturing operations in Germany and Canada. Most of the operating costs and expenses of our German mills are incurred in euros and those of our Canadian mills in Canadian dollars. However, the majority of our sales are in products quoted in dollars. Our results of operations and financial condition are reported in dollars. As a result, our costs generally benefit from a strengthening dollar but are adversely affected by a decrease in the value of the dollar relative to the euro and to the Canadian dollar. Such declines in the dollar relative to the euro and the Canadian dollar reduce our operating margins and the cash flow available to fund our operations and to service our debt. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are exposed to market risks from changes in interest rates and foreign currency exchange rates, particularly the exchange rates between the dollar and the euro and Canadian dollar. Changes in these rates may affect our results of operations and financial condition and, consequently, our fair value. We seek to manage these risks through internal risk management policies as well as the periodic use of derivatives.

For additional information, please refer to Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk included in our annual report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, referred to as the "Exchange Act"), as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

It should be noted that any system of controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness and there can be no assurance that any design will succeed in achieving its stated goals.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are subject to routine litigation incidental to our business, including that which is described in our latest annual report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. We do not believe that the outcome of such litigation will have a material adverse effect on our business or financial condition.

The European Union has opened a cartel investigation into the wood pulp sector and on October 12, 2021 conducted inspections of major European pulp producers including our German operations. We are cooperating with the investigation.

~~There~~Other than as set out below, there have been no material changes to the factors disclosed in Item 1A. Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

Our business, financial condition and results of operations could be adversely affected by disruptions in the global and European economies caused by Russia’s invasion of Ukraine.

The global economy has been negatively impacted by increasing tension, uncertainty and tragedy resulting from Russia's invasion of Ukraine. The adverse and uncertain economic conditions resulting therefrom has and may further negatively impact global demand, cause supply chain disruptions and increase costs for transportation, energy and other raw materials. Furthermore, governments in the United States, the European Union, the United Kingdom, Canada and others have imposed financial and economic sanctions on certain industry segments and various parties in Russia. We are monitoring the conflict including the potential impact of financial and economic sanctions on the global economy and particularly the economies of Europe. Increased trade barriers, sanctions and other restrictions on global or regional trade could adversely affect our business, financial condition and results of operations. Although we have no operations in Russia or Ukraine, the destabilizing effects of Russia’s invasion of Ukraine could have other adverse effects on our business. Further escalation of geopolitical tensions related to this military conflict and/or its expansion could result in loss of property, expropriation, cyberattacks, supply disruptions, plant closures and an inability to obtain key supplies and materials, as well as adversely affect both our and our customers' supply chains and logistics, particularly in Europe.

In many cases, both our German operations and those of European customers depend on the availability of natural gas for use in their manufacturing operations. A very significant proportion of Germany's natural gas supply originates from Russia. Material disruptions of natural gas supply to Europe and in particular Germany, whether from sanctions, counter-measures by Russia, other restrictions, damage to infrastructure and logistics or otherwise from the destabilizing effects of military conflict could materially and adversely impact European and global natural gas and oil markets. Material disruptions to the natural gas supply of Germany could adversely affect its availability to industry and our ability to operate our German pulp and lumber mills in the ordinary course which could adversely affect our business, results of operations and financial condition.

In addition, the effects of such military conflict could heighten and increase many of the other risks described in Part I, Item 1A. "Risk Factors" in our Form 10-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Washington		47-0956945
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

Large accelerated filer	☐☒	Accelerated filer	☒☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

	Number of PSUs
Outstanding as of January 1, ~~2021~~2022		~~2,364,848~~2,754,472
Granted		~~1,007,912~~1,247,516
Vested and issued		(~~120,271~~94,940	)
Forfeited		(~~498,017~~531,610	)
Outstanding as of ~~September 30, 2021~~March 31, 2022		~~2,754,472~~3,375,438

(a)	~~Number~~For the three month period ended March 31, 2022, the weighted average number of ~~Restricted~~ ~~Shares~~
~~Outstanding~~ common shares outstanding excludes 49,195 restricted shares which have been issued, but have not vested as of ~~January 1, 2021~~		March 31, 2022 (2021 – 68,140
~~Granted~~		~~49,195~~
~~Vested~~		~~(68,140~~	)
~~Outstanding as of September 30, 2021~~		~~49,195~~	restricted shares).

Exhibit No.		Description


31.1		Section 302 Certification of Chief Executive Officer

31.2		Section 302 Certification of Chief Financial Officer

32.1*		Section 906 Certification of Chief Executive Officer

32.2*		Section 906 Certification of Chief Financial Officer

101		The following financial information from the Quarterly Report on Form 10-Q for the fiscal period ended ~~September 30, 2021~~March 31, 2022 of Mercer International Inc., formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Interim Consolidated Statements of Operations; (ii) Interim Consolidated Statements of Comprehensive ~~Income;~~Income (Loss); (iii) Interim Consolidated Balance Sheets; (iv) Interim Consolidated Statements of Changes in Shareholders' Equity; (v) Interim Consolidated Statements of Cash Flows; and (vi) Notes to the Interim Consolidated Financial Statements.
104		The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2021~~March 31, 2022 has been formatted in Inline XBRL.


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date Declared	Dividend Per Common Share		Amount
February 16, 2021	$	0.065	$	4,289
April 29, 2021		0.065		4,293
July 29, 2021		0.065		4,292
	$	0.195	$	12,874

	Foreign Currency Translation Adjustment			Defined Benefit Pension and Other Post- Retirement Benefit Items			Total
Balance as of January 1, 2021	$	(19,578	)	$	(7,997	)	$	(27,575	)
Other comprehensive income (loss) before reclassifications		(59,676	)		388			(59,288	)
Amounts reclassified		0			(85	)		(85	)
Other comprehensive income (loss), net of taxes		(59,676	)		303			(59,373	)
Balance as of September 30, 2021	$	(79,254	)	$	(7,694	)	$	(86,948	)

Three Months Ended September 30, 2020	Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	274,916	$	57,053	$	1,182		$	333,151
Operating income (loss)	$	3,753	$	11,963	$	(1,980	)	$	13,736
Depreciation and amortization	$	28,251	$	3,446	$	187		$	31,884
Revenues by major products
Pulp	$	253,056	$	0	$	0		$	253,056
Lumber		0		53,612		0			53,612
Energy and chemicals		21,860		2,226		1,182			25,268
Wood residuals		0		1,215		0			1,215
Total revenues	$	274,916	$	57,053	$	1,182		$	333,151
Revenues by geographical markets (a)
U.S.	$	29,295	$	31,466	$	540		$	61,301
Germany		79,535		11,744		0			91,279
China		83,554		0		0			83,554
Other countries		82,532		13,843		642			97,017
Total revenues	$	274,916	$	57,053	$	1,182		$	333,151

Nine Months Ended September 30, 2021	Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	1,046,748	$	232,149	$	5,401		$	1,284,298
Operating income (loss)	$	138,552	$	88,590	$	(10,522	)	$	216,620
Depreciation and amortization	$	84,995	$	11,146	$	1,096		$	97,237
Total assets (a)	$	1,765,620	$	249,380	$	216,753		$	2,231,753
Revenues by major products
Pulp	$	989,060	$	0	$	0		$	989,060
Lumber		0		221,201		0			221,201
Energy and chemicals		57,688		6,607		5,401			69,696
Wood residuals		0		4,341		0			4,341
Total revenues	$	1,046,748	$	232,149	$	5,401		$	1,284,298
Revenues by geographical markets (b)
U.S.	$	128,905	$	125,514	$	2,281		$	256,700
Germany		318,781		48,265		0			367,046
China		263,717		1,258		0			264,975
Other countries		335,345		57,112		3,120			395,577
Total revenues	$	1,046,748	$	232,149	$	5,401		$	1,284,298

Nine Months Ended September 30, 2020	Pulp		Wood Products		Corporate and Other			Consolidated
Revenues from external customers	$	876,567	$	144,558	$	3,820		$	1,024,945
Operating income (loss)	$	33,302	$	21,845	$	(7,034	)	$	48,113
Depreciation and amortization	$	85,841	$	8,627	$	563		$	95,031
Revenues by major products
Pulp	$	808,923	$	0	$	0		$	808,923
Lumber		0		132,209		0			132,209
Energy and chemicals		67,644		7,486		3,820			78,950
Wood residuals		0		4,863		0			4,863
Total revenues	$	876,567	$	144,558	$	3,820		$	1,024,945
Revenues by geographical markets (a)
U.S.	$	102,813	$	66,710	$	1,701		$	171,224
Germany		246,775		38,941		0			285,716
China		247,916		0		0			247,916
Other countries		279,063		38,907		2,119			320,089
Total revenues	$	876,567	$	144,558	$	3,820		$	1,024,945

	MERCER INTERNATIONAL INC.

	By:		/s/ David M. Gandossi
			David M. Gandossi
			Chief Executive Officer and President