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Mercer International Inc. Reports Fourth Quarter and Year End 2022 Results and Announces Quarterly Cash Dividend of $0.075
ソース: Nasdaq GlobeNewswire / 16 2 2023 15:30:00 America/Chicago
Selected Highlights
- Fourth quarter net income of $20.0 million and Operating EBITDA* of $96.1 million
- Full year 2022 record net income of $247.0 million and record Operating EBITDA* of $536.5 million
- Quarterly cash dividend of $0.075 per share
NEW YORK, Feb. 16, 2023 (GLOBE NEWSWIRE) -- Mercer International Inc. (Nasdaq: MERC) today reported fourth quarter 2022 Operating EBITDA of $96.1 million a decrease from $164.9 million in the fourth quarter of 2021 and $140.9 million in the third quarter of 2022.
In the fourth quarter of 2022, net income was $20.0 million (or $0.30 per share) compared to $74.5 million (or $1.13 per basic share and $1.12 per diluted share) in the fourth quarter of 2021 and net income of $66.7 million (or $1.01 per basic share and $1.00 per diluted share) in the third quarter of 2022.
In 2022, Operating EBITDA increased by 12% to a record $536.5 million from $478.8 million in 2021. In 2022, net income was a record $247.0 million (or $3.74 per basic share and $3.71 per diluted share) from $171.0 million (or $2.59 per basic share and $2.58 per diluted share) in 2021.
Mr. Juan Carlos Bueno, the Chief Executive Officer, stated: “Our solid fourth quarter operating results reflect strong pulp sales, which were however more than offset by lower sales prices, higher planned maintenance and fiber costs and the negative impact of the weaker US dollar compared to our third quarter operating results.
Total pulp production increased approximately 6% compared to the third quarter primarily due to improved production at our Stendal mill as they ramped up production following the third quarter shut down caused by a fire in its wood yard. The Stendal mill is currently running at or about capacity and the repairs related to the fire are expected to be completed in the second quarter. Pulp sales volumes also increased relative to the third quarter in proportion to the pulp production increase.
Our solid wood segment’s fourth quarter operating results include the results of our recently acquired Torgau mill. Overall, this segment’s operating results were negatively impacted by lower sales prices, which were partially offset by improved lumber and energy sales volumes. During the quarter we achieved approximately $6 million of synergies on an annualized basis from our Torgau operations. These primarily came in the form of optimizing fiber utilizations among our mills. Our integration efforts are ongoing as we work to capture all available synergies.
Lower energy prices and the impact of the German energy windfall tax negatively affected our fourth quarter results by approximately $49 million compared to the prior quarter. The decline is the result of lower energy prices in Germany in the fourth quarter as warm weather and strong natural gas storage levels took significant pressure off the market electricity price. Effective December 1, 2022, Germany implemented a windfall tax which taxes revenues at 90% above a “base threshold”. Energy prices in Germany ended the year at about such base threshold level.
In the fourth quarter we also experienced significant fiber cost increases as demand for low quality pulp wood in Germany was being driven by the energy sector and in Western Canada there was lower fiber availability due to sawmill curtailments. In the fourth quarter our fiber costs increased roughly $21 million compared to the prior quarter. Planned major maintenance negatively impacted EBITDA by almost $20 million in the current quarter compared to the third quarter.
In China we currently expect modestly higher NBSK pulp prices in the first part of 2023 due to China's reopening after lifting of COVID-19 restrictions and the seasonal demand increase after the lunar new year. We currently expect modestly declining NBSK pulp prices in Europe and North America in the first half of 2023 as a result of lower demand due to inflationary pressures negatively impacting paper demand. For NBHK pulp we currently expect prices to decrease in the first half of 2023 due to additional supply coming online.
In our solid wood segment, we currently expect lumber prices to modestly increase in the first half of 2023 due to producer curtailments, low customer inventory levels and the start of the construction season. These positive impacts will be partially offset by lower demand caused by continued economic uncertainty due to inflation and higher interest rates. ”
Mr. Bueno concluded: “As I look to 2023, I am excited about Mercer’s strong operational foundation and the many options it gives us as we look to continue to grow and diversify our solid wood and bio-products revenues. Last year Mercer Mass Timber built up the engineering and design team and enhanced the operations to position it to bid on major construction projects and fill out its order book. We will continue to run the Company based on continuous improvement to enhance efficiency, lower costs and manage our liquidity prudently to enhance value.”
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*Operating EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States ("GAAP") and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. See page 6 of the financial tables included in this press release for a reconciliation of net income to Operating EBITDA.
Consolidated Financial Results
Q4 Q3 Q4 YTD YTD 2022 2022 2021 2022 (1) 2021 (in thousands, except per share amounts) Revenues $ 583,056 $ 532,814 $ 518,957 $ 2,280,937 $ 1,803,255 Operating income $ 47,263 $ 108,723 $ 129,963 $ 392,368 $ 346,583 Operating EBITDA $ 96,128 $ 140,867 $ 164,925 $ 536,521 $ 478,782 Loss on early extinguishment of debt $ — $ — $ — $ — $ (30,368 ) (2) Net income $ 20,024 $ 66,746 $ 74,522 $ 247,039 $ 170,988 Net income per common share Basic $ 0.30 $ 1.01 $ 1.13 $ 3.74 $ 2.59 Diluted $ 0.30 $ 1.00 $ 1.12 $ 3.71 $ 2.58 ______________
(1) Results of Torgau included from the date of acquisition on September 30, 2022.
(2) Redemption of 6.50% senior notes due 2024 and 7.375% senior notes due 2025.
Consolidated – Three Months Ended December 31, 2022 Compared to Three Months Ended December 31, 2021Total revenues in the fourth quarter of 2022 increased by approximately 12% to $583.1 million from $519.0 million in the same quarter of 2021 primarily due to higher pulp sales realizations and the inclusion of the Torgau facility from September 30, 2022 partially offset by lower sales volumes and lumber sales realizations.
Costs and expenses in the fourth quarter of 2022 increased by approximately 38% to $535.8 million from $389.0 million in the fourth quarter of 2021 due to the inclusion of Torgau, higher per unit fiber and chemical costs and maintenance costs partially offset by the positive impact of a stronger dollar on our euro and Canadian dollar denominated costs and expenses and a lower pulp sales volume.
In the fourth quarter of 2022, Operating EBITDA decreased by approximately 42% to $96.1 million from $164.9 million in the same quarter of 2021 primarily due to higher per unit fiber and chemical costs and higher maintenance costs partially offset by higher pulp sales realizations and the positive impact of a stronger dollar.
Segment Results
Pulp
Three Months Ended December 31, 2022 2021 (in thousands) Pulp revenues $ 425,421 $ 400,379 Energy and chemical revenues $ 37,804 $ 35,966 Operating income $ 68,972 $ 113,172 In the fourth quarter of 2022, pulp segment operating income decreased by approximately 39% to $69.0 million from $113.2 million in the same quarter of 2021 primarily due to higher per unit fiber and chemical costs and higher maintenance costs partially offset by higher realized prices and the positive impact of a stronger dollar.
Pulp revenues in the fourth quarter of 2022 increased by approximately 6% to $425.4 million from $400.4 million in the same quarter of 2021 due to higher sales realizations partially offset by lower sales volumes. In the fourth quarter of 2022, third party industry quoted average list prices for NBSK pulp increased from the same quarter of 2021 primarily as a result of low customer inventory levels. Our average NBSK pulp sales realizations increased by approximately 16% to $913 per ADMT in the fourth quarter of 2022 from approximately $784 per ADMT in the same quarter of 2021.
In the fourth quarter of 2022 compared to the same quarter of 2021, we had a positive impact of approximately $27.4 million in operating income due to foreign exchange, primarily as a result of the effect of the stronger dollar on our euro and Canadian dollar denominated costs and expenses.
Costs and expenses in the fourth quarter of 2022 increased by approximately 22% to $394.3 million from $323.3 million in the fourth quarter of 2021 primarily due to higher per unit fiber and chemical costs and higher maintenance costs partially offset by the positive impact of a stronger dollar and lower pulp sales volumes. In the fourth quarter of 2022, our pulp mills had 21 days of annual maintenance downtime compared to no annual maintenance downtime in the fourth quarter of 2021.
In the fourth quarter of 2022 per unit fiber costs increased by approximately 43% from the same quarter of 2021 due to higher per unit fiber costs for all of our mills. Our German mills had higher per unit fiber costs as a result of strong demand from other wood consumers such as heating pellet manufacturers. For our Canadian mills, per unit fiber costs increased due to strong demand in the mills' fiber baskets and for our Celgar mill a decrease in the availability of wood chips due to regional sawmill curtailments. In the first quarter of 2023, we currently expect modestly lower per unit fiber costs in Germany due to lower demand for wood for energy purposes and generally flat per unit fiber costs in Canada.
Solid Wood
Three Months Ended December 31, 2022 2021 (in thousands) Lumber revenues $ 45,041 $ 71,965 Energy revenues $ 7,310 $ 4,940 Manufactured products revenues $ 5,583 $ 2,391 Pallet revenues $ 36,063 $ — Biofuel revenues $ 17,691 $ — Wood residual revenues $ 6,722 $ 2,027 Operating income (loss) $ (14,281 ) $ 17,852 In the fourth quarter of 2022, the solid wood segment had an operating loss of $14.3 million compared to operating income of $17.9 million in the same quarter of 2021 primarily due to lower sales realizations.
Average lumber sales realizations decreased by approximately 34% to $454 per Mfbm in the fourth quarter of 2022 from approximately $689 per Mfbm in the same quarter of 2021 due to lower demand in both the European and U.S. markets. Demand in both the European and U.S. markets was negatively impacted by rising interest rates, inflationary pressures and an uncertain economic outlook.
Fiber costs were approximately 75% of our lumber cash production costs in the fourth quarter of 2022. In the fourth quarter of 2022, per unit fiber costs for our Friesau sawmill were flat when compared to the same quarter of 2021. We currently expect per unit fiber costs to modestly decrease in the first quarter of 2023.
Consolidated – Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Total revenues in 2022 increased by approximately 26% to a record $2,280.9 million from $1,803.3 million in 2021 primarily due to higher sales realizations, higher pulp sales volumes and the inclusion of revenues from our Torgau facility since September 30, 2022. These increases were partially offset by the negative impact of a stronger dollar on our euro denominated energy and European lumber revenues.
Costs and expenses in 2022 increased by approximately 30% to $1,888.6 million from $1,456.7 million in 2021 primarily due to higher per unit fiber, freight, chemical and energy costs, the inclusion of Torgau's results and a higher pulp sales volume partially offset by the positive impact of a stronger dollar on our euro and Canadian dollar denominated costs and expenses.
In 2022, Operating EBITDA increased by approximately 12% to a record $536.5 million from $478.8 million in 2021 as higher sales realizations, the positive impact of a stronger dollar and higher pulp sales volumes were only partially offset by higher per unit fiber and other production and freight costs.
Liquidity
As of December 31, 2022, we had cash and cash equivalents of $354.0 million and approximately $281.6 million available under our revolving credit facilities providing us with aggregate liquidity of about $635.6 million.
Quarterly Dividend
A quarterly dividend of $0.075 per share will be paid on April 5, 2023 to all shareholders of record on March 29, 2023. Future dividends are subject to Board approval and may be adjusted as business and industry conditions warrant.
Earnings Release Call
In conjunction with this release, Mercer International Inc. will host a conference call, which will be simultaneously broadcast live over the Internet. Management will host the call, which is scheduled for February 17, 2023 at 10:00 AM ET. Listeners can access the conference call live and archived for 30 days over the Internet at https://edge.media-server.com/mmc/p/9vbapy7e or through a link on the company's home page at https://www.mercerint.com. Please allow 15 minutes prior to the call to visit the site and download and install any necessary audio software.
Mercer International Inc. is a global forest products company with operations in Germany, USA and Canada with consolidated annual production capacity of 2.3 million tonnes of pulp, 960 million board feet of lumber, 140 thousand cubic meters of CLT, 17 million pallets and 230,000 metric tonnes of biofuels. To obtain further information on the company, please visit its web site at https://www.mercerint.com.
The preceding includes forward looking statements which involve known and unknown risks and uncertainties which may cause our actual results in future periods to differ materially from forecasted results. Words such as "expects", "anticipates", "are optimistic that", "projects", "intends", "designed", "will", "believes", "estimates", "may", "could" and variations of such words and similar expressions are intended to identify such forward-looking statements. Among those factors which could cause actual results to differ materially are the following: the highly cyclical nature of our business, raw material costs, our level of indebtedness, competition, foreign exchange and interest rate fluctuations, our use of derivatives, expenditures for capital projects, environmental regulation and compliance, disruptions to our production, market conditions and other risk factors listed from time to time in our SEC reports.
APPROVED BY:
Jimmy S.H. Lee
Executive Chairman
(604) 684-1099Juan Carlos Bueno
Chief Executive Officer
(604) 684-1099
-FINANCIAL TABLES FOLLOW-Summary Financial Highlights
Q4 Q3 Q4 YTD YTD 2022 2022 2021 2022 (1) 2021 (in thousands, except per share amounts) Pulp segment revenues $ 463,225 $ 456,657 $ 436,345 $ 1,866,117 $ 1,483,093 Solid wood segment revenues 118,410 74,266 81,323 408,458 313,472 Corporate and other revenues 1,421 1,891 1,289 6,362 6,690 Total revenues $ 583,056 $ 532,814 $ 518,957 $ 2,280,937 $ 1,803,255 Pulp segment operating income $ 68,972 $ 109,985 $ 113,172 $ 340,664 $ 251,724 Solid wood segment operating income (loss) (14,281 ) 2,896 17,852 70,642 106,092 Corporate and other operating loss (7,428 ) (4,158 ) (1,061 ) (18,938 ) (11,233 ) Total operating income $ 47,263 $ 108,723 $ 129,963 $ 392,368 $ 346,583 Pulp segment depreciation and amortization $ 29,199 $ 28,174 $ 30,298 $ 112,058 $ 115,293 Solid wood segment depreciation and amortization 19,451 3,733 4,288 31,170 15,784 Corporate and other depreciation and amortization 215 237 376 925 1,122 Total depreciation and amortization $ 48,865 $ 32,144 $ 34,962 $ 144,153 $ 132,199 Operating EBITDA $ 96,128 $ 140,867 $ 164,925 $ 536,521 $ 478,782 Loss on early extinguishment of debt $ — $ — $ — $ — $ (30,368 ) (2) Income tax provision $ (8,608 ) $ (31,294 ) $ (43,706 ) $ (98,264 ) $ (89,579 ) Net income $ 20,024 $ 66,746 $ 74,522 $ 247,039 $ 170,988 Net income per common share Basic $ 0.30 $ 1.01 $ 1.13 $ 3.74 $ 2.59 Diluted $ 0.30 $ 1.00 $ 1.12 $ 3.71 $ 2.58 Common shares outstanding at period end 66,167 66,167 66,037 66,167 66,037 ______________
(1) Results of Torgau included from the date of acquisition on September 30, 2022.
(2) Redemption of 6.50% senior notes due 2024 and 7.375% senior notes due 2025.Summary Operating Highlights
Q4 Q3 Q4 YTD YTD 2022 2022 2021 2022 (1) 2021 Pulp Segment Pulp production ('000 ADMTs) NBSK 390.9 362.9 476.2 1,607.6 1,671.2 NBHK 80.6 82.1 48.8 271.0 192.7 Annual maintenance downtime ('000 ADMTs) 39.5 17.3 - 111.0 253.7 Annual maintenance downtime (days) 21 17 - 80 188 Pulp sales ('000 ADMTs) NBSK 393.4 356.6 465.6 1,660.8 1,616.9 NBHK 72.0 69.3 50.7 257.0 195.8 Average NBSK pulp prices ($/ADMT)(2) Europe 1,442 1,500 1,302 1,427 1,243 China 920 969 723 949 850 North America 1,745 1,800 1,472 1,704 1,478 Average NBHK pulp prices ($/ADMT)(2) China 837 855 562 794 661 North America 1,608 1,620 1,262 1,514 1,225 Average pulp sales realizations ($/ADMT)(3) NBSK 913 911 784 876 779 NBHK 896 990 649 869 615 Energy production ('000 MWh)(4) 515.8 484.2 480.9 2,028.1 1,826.5 Energy sales ('000 MWh)(4) 183.4 174.3 184.2 751.7 702.0 Average energy sales realizations ($/MWh)(4) 156 (5) 339 184 214 (5) 123 Solid Wood Segment Lumber Production (MMfbm) 117.3 97.1 111.3 442.2 447.9 Sales (MMfbm) 99.2 89.8 104.4 409.9 419.7 Average sales realizations ($/Mfbm) 454 605 689 703 699 Energy Production and sales ('000 MWh) 39.0 20.6 23.2 109.6 74.6 Average sales realizations ($/MWh) 159 (5) 394 213 224 (5) 155 Manufactured products(6) Production ('000 cubic meters) 8.3 15.0 6.1 36.3 6.1 Sales ('000 cubic meters) 6.1 10.5 4.1 28.8 4.1 Average sales realizations ($/cubic meters) 561 677 580 715 580 Pallets Production ('000 units) 2,568.4 - - 2,568.4 - Sales ('000 units) 2,646.3 - - 2,646.3 - Average sales realizations ($/unit) 14 - - 14 - Biofuels(7) Production ('000 tonnes) 45.7 - - 45.7 - Sales ('000 tonnes) 49.8 - - 49.8 - Average realizations ($/tonne) 355 - - 355 - Average Spot Currency Exchange Rates $ / €(8) 1.0218 1.0066 1.1437 1.0534 1.1830 $ / C$(8) 0.7366 0.7659 0.7936 0.7691 0.7981 ______________
(1) Results of Torgau included from the date of acquisition on September 30, 2022.
(2) Source: RISI pricing report. Europe and North America are list prices. China are net prices which include discounts, allowances and rebates.
(3) Sales realizations after customer discounts, rebates and other selling concessions. Incorporates the effect of pulp price variations occurring between the order and shipment dates.
(4) Does not include our 50% joint venture interest in the Cariboo mill, which is accounted for using the equity method.
(5) Energy sales realizations for Q4 2022 and YTD 2022 are net of the German energy windfall tax of $6.7 million for the pulp segment and $1.1 million for the solid wood segment.
(6) Manufactured products includes finger joint lumber and cross-laminated timber.
(7) Biofuels includes briquettes and pellets.
(8) Average Federal Reserve Bank of New York Noon Buying Rates over the reporting period.MERCER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)Three Months Ended
December 31,For the Year Ended
December 31,2022 2021 2022 2021 Revenues $ 583,056 $ 518,957 $ 2,280,937 $ 1,803,255 Costs and expenses Cost of sales, excluding depreciation and amortization 451,196 335,378 1,638,672 1,245,622 Cost of sales depreciation and amortization 48,841 34,942 144,064 132,117 Selling, general and administrative expenses 35,756 18,674 105,833 78,933 Operating income 47,263 129,963 392,368 346,583 Other income (expenses) Interest expense (18,768 ) (17,016 ) (71,499 ) (70,047 ) Loss on early extinguishment of debt — — — (30,368 ) Other income 137 5,281 24,434 14,399 Total other expenses, net (18,631 ) (11,735 ) (47,065 ) (86,016 ) Income before income taxes 28,632 118,228 345,303 260,567 Income tax provision (8,608 ) (43,706 ) (98,264 ) (89,579 ) Net income $ 20,024 $ 74,522 $ 247,039 $ 170,988 Net income per common share Basic $ 0.30 $ 1.13 $ 3.74 $ 2.59 Diluted $ 0.30 $ 1.12 $ 3.71 $ 2.58 Dividends declared per common share $ 0.075 $ 0.065 $ 0.300 $ 0.260 MERCER INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)December 31, 2022 2021 ASSETS Current assets Cash and cash equivalents $ 354,032 $ 345,610 Accounts receivable, net 351,993 345,345 Inventories 450,470 356,731 Prepaid expenses and other 21,680 16,619 Total current assets 1,178,175 1,064,305 Property, plant and equipment, net 1,341,322 1,135,631 Investment in joint ventures 45,635 49,651 Amortizable intangible assets, net 61,497 47,902 Goodwill 30,937 — Operating lease right-of-use assets 15,049 9,712 Pension asset 4,397 4,136 Other long-term assets 48,025 38,718 Deferred income tax — 1,177 Total assets $ 2,725,037 $ 2,351,232 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable and other $ 377,306 $ 282,307 Pension and other post-retirement benefit obligations 755 817 Total current liabilities 378,061 283,124 Long-term debt 1,346,508 1,237,545 Pension and other post-retirement benefit obligations 12,178 21,252 Operating lease liabilities 9,475 6,574 Other long-term liabilities 14,072 13,590 Deferred income tax 125,959 95,123 Total liabilities 1,886,253 1,657,208 Shareholders’ equity Common shares $1 par value; 200,000,000 authorized; 66,167,000 issued and outstanding (2021 – 66,037,000) 66,132 65,988 Additional paid-in capital 354,495 347,902 Retained earnings 598,119 370,927 Accumulated other comprehensive loss (179,962 ) (90,793 ) Total shareholders’ equity 838,784 694,024 Total liabilities and shareholders’ equity $ 2,725,037 $ 2,351,232 MERCER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)For the Year Ended December 31, 2022 2021 2020 Cash flows from (used in) operating activities Net income (loss) $ 247,039 $ 170,988 $ (17,235 ) Adjustments to reconcile net income (loss) to cash flows from operating activities Depreciation and amortization 144,153 132,199 128,921 Deferred income tax provision (recovery) 7,003 18,791 (15,249 ) Inventory impairment — — 25,998 Loss on early extinguishment of debt — 30,368 — Defined benefit pension plans and other post-retirement benefit plan expense 1,708 2,831 3,053 Stock compensation expense 6,737 2,394 928 Gain on sale of investments (519 ) — (17,540 ) Foreign exchange transaction losses (gains) (16,802 ) (16,597 ) 13,272 Other (722 ) 384 543 Defined benefit pension plans and other post-retirement benefit plan contributions (2,942 ) (4,258 ) (4,164 ) Changes in working capital Accounts receivable (20,476 ) (121,579 ) (6,269 ) Inventories (63,184 ) (96,442 ) (11,430 ) Accounts payable and accrued expenses 66,796 75,589 (53,744 ) Other (8,131 ) (12,454 ) (5,519 ) Net cash from (used in) operating activities 360,660 182,214 41,565 Cash flows from (used in) investing activities Purchase of property, plant and equipment (178,742 ) (159,440 ) (78,518 ) Acquisitions, net of cash acquired (256,604 ) (51,258 ) — Property insurance proceeds 8,616 21,540 — Purchase of amortizable intangible assets (495 ) (1,385 ) (647 ) Purchase of investments (75,000 ) — (9,370 ) Proceeds from sale of investments 75,519 — 26,910 Other 1,029 3,416 1,798 Net cash from (used in) investing activities (425,677 ) (187,127 ) (59,827 ) Cash flows from (used in) financing activities Redemption of senior notes — (824,557 ) — Proceeds from issuance of senior notes — 875,000 — Proceeds from (repayment of) revolving credit facilities, net 115,330 (33,396 ) 52,651 Dividend payments (19,847 ) (17,167 ) (21,892 ) Payment of debt issuance costs (3,871 ) (14,483 ) — Proceeds from government grants 1,067 9,333 362 Payment of finance lease obligations (10,003 ) (7,850 ) (4,636 ) Other (711 ) 3,616 (168 ) Net cash from (used in) financing activities 81,965 (9,504 ) 26,317 Effect of exchange rate changes on cash and cash equivalents (8,526 ) (1,071 ) 1,958 Net increase (decrease) in cash and cash equivalents 8,422 (15,488 ) 10,013 Cash and cash equivalents, beginning of year 345,610 361,098 351,085 Cash and cash equivalents, end of year $ 354,032 $ 345,610 $ 361,098 MERCER INTERNATIONAL INC.
COMPUTATION OF OPERATING EBITDA
(Unaudited)
(In thousands)Operating EBITDA is defined as operating income plus depreciation and amortization and non-recurring capital asset impairment charges. Management uses Operating EBITDA as a benchmark measurement of its own operating results, and as a benchmark relative to its competitors. Management considers 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 an actual cash cost, and depreciation expense varies widely from company to company in a manner that management considers 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, 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 or operating income as a measure of performance, nor as an alternative to net cash from (used in) operating activities as a measure of liquidity. The following tables set forth the net income to Operating EBITDA:
Q4 Q3 Q4 YTD YTD 2022 2022 2021 2022 (1) 2021 Net income $ 20,024 $ 66,746 $ 74,522 $ 247,039 $ 170,988 Income tax provision 8,608 31,294 43,706 98,264 89,579 Interest expense 18,768 17,935 17,016 71,499 70,047 Loss on early extinguishment of debt — — — — 30,368 Other income (137 ) (7,252 ) (5,281 ) (24,434 ) (14,399 ) Operating income 47,263 108,723 129,963 392,368 346,583 Add: Depreciation and amortization 48,865 32,144 34,962 144,153 132,199 Operating EBITDA $ 96,128 $ 140,867 $ 164,925 $ 536,521 $ 478,782 ______________
(1) Results of Torgau included from the date of acquisition on September 30, 2022.
