For the second quarter of 2017, Methanex (TSX:MX) (NASDAQ:MEOH)
reported net income attributable to Methanex shareholders of $84
million ($0.89 per common share on a diluted basis) compared to net
income of $132 million ($1.46 per common share on a diluted basis)
in the first quarter of 2017. Adjusted EBITDA for the second
quarter of 2017 was $174 million and Adjusted net income was $74
million ($0.85 per common share). This compares with Adjusted
EBITDA of $267 million and Adjusted net income of $140 million
($1.56 per common share) for the first quarter of 2017.
John Floren, President and CEO of Methanex
commented, "The lower Adjusted EBITDA and earnings in the second
quarter reflects primarily the decline in methanol prices we saw
during the quarter. Our average realized methanol price decreased
$38 per tonne in the quarter to $327 per tonne, which compares to
$365 per tonne realized in the first quarter of 2017. Sales of
produced methanol in the second quarter were 1.79 million tonnes,
relatively unchanged compared to the first quarter. Heading into
the third quarter, we are encouraged to see some stability in
global methanol prices."
"During the quarter we returned $141 million to
shareholders through dividends and share repurchases. To date we
have repurchased 3,755,000 common shares for approximately $168
million since commencement of our normal course issuer bid on March
13, 2017. We announced today that the Board of Directors approved
an amendment to the normal course issuer bid which increases the
number of common shares that may be purchased from 4,492,141 to
6,152,358 common shares, representing 10% of the public float at
the time of the announcement of the bid and the maximum number of
common shares that may be purchased under this bid. The increased
bid illustrates the Company's commitment to return excess cash to
shareholders."
"We continue to be optimistic that our
underutilized 1.7 million tonne Chile facilities represent a very
low capital cost growth opportunity for Methanex due to the
significant progress in developing natural gas reserves in the
area. We have low capital and financing requirements in the medium
term, and we have the ability to generate significant free cash
flow at a wide range of methanol prices. With $361 million of cash
on hand at the end of the second quarter, a revolving credit
facility, a robust balance sheet, and strong cash generation
capability, we believe we are well positioned to meet our financial
commitments, pursue our near-term growth opportunities in Chile and
deliver on our commitment to return excess cash to shareholders
through dividends and share repurchases," Floren said.
FURTHER INFORMATIONThe
information set forth in this news release summarizes Methanex's
key financial and operational data for the second quarter of 2017.
It is not a complete source of information for readers and is not
in any way a substitute for reading the second quarter 2017
Management’s Discussion and Analysis ("MD&A") dated
July 26, 2017 and the unaudited condensed consolidated interim
financial statements for the period ended June 30, 2017, both
of which are available from the Investor Relations section of our
website at www.methanex.com. The MD&A and the unaudited
condensed consolidated interim financial statements for the period
ended June 30, 2017 are also available on the Canadian
Securities Administrators' SEDAR website at www.sedar.com and
on the United States Securities and Exchange Commission's EDGAR
website at www.sec.gov.
FINANCIAL AND OPERATIONAL DATA
|
Three Months Ended |
|
Six Months Ended |
($
millions except per share amounts and where noted) |
Jun 30 2017 |
Mar 31 2017 |
Jun 30 2016 |
|
Jun 30 2017 |
Jun 30 2016 |
Production (thousands
of tonnes) (attributable to Methanex shareholders) |
1,614 |
|
1,866 |
|
1,770 |
|
|
3,480 |
|
3,409 |
|
Sales volume (thousands
of tonnes) |
|
|
|
|
|
|
Methanex-produced methanol |
1,790 |
|
1,756 |
|
1,689 |
|
|
3,546 |
|
3,218 |
|
Purchased
methanol |
387 |
|
512 |
|
533 |
|
|
899 |
|
955 |
|
Commission sales |
297 |
|
304 |
|
140 |
|
|
601 |
|
308 |
|
Total
sales volume 1 |
2,474 |
|
2,572 |
|
2,362 |
|
|
5,046 |
|
4,481 |
|
|
|
|
|
|
|
|
Methanex average
non-discounted posted price ($ per tonne) 2 |
398 |
|
437 |
|
260 |
|
|
418 |
|
266 |
|
Average realized price
($ per tonne) 3 |
327 |
|
365 |
|
223 |
|
|
347 |
|
227 |
|
|
|
|
|
|
|
|
Revenue |
669 |
|
810 |
|
468 |
|
|
1,480 |
|
903 |
|
Adjusted revenue |
716 |
|
832 |
|
496 |
|
|
1,548 |
|
946 |
|
Adjusted EBITDA |
174 |
|
267 |
|
38 |
|
|
441 |
|
74 |
|
Cash flows from
operating activities |
250 |
|
221 |
|
34 |
|
|
470 |
|
104 |
|
Adjusted net income
(loss) |
74 |
|
140 |
|
(31 |
) |
|
214 |
|
(55 |
) |
Net income (loss)
(attributable to Methanex shareholders) |
84 |
|
132 |
|
(3 |
) |
|
216 |
|
(26 |
) |
|
|
|
|
|
|
|
Adjusted net income
(loss) per common share |
0.85 |
|
1.56 |
|
(0.34 |
) |
|
2.40 |
|
(0.62 |
) |
Basic net income (loss)
per common share |
0.96 |
|
1.47 |
|
(0.03 |
) |
|
2.43 |
|
(0.29 |
) |
Diluted net income
(loss) per common share |
0.89 |
|
1.46 |
|
(0.08 |
) |
|
2.39 |
|
(0.34 |
) |
|
|
|
|
|
|
|
Common share
information (millions of shares) |
|
|
|
|
|
|
Weighted
average number of common shares |
88 |
|
90 |
|
90 |
|
|
89 |
|
90 |
|
Diluted
weighted average number of common shares |
88 |
|
90 |
|
90 |
|
|
89 |
|
90 |
|
Number of common shares outstanding, end of period |
87 |
|
89 |
|
90 |
|
|
87 |
|
90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Methanex-produced methanol represents our
equity share of volume produced at our facilities and excludes
volume marketed on a commission basis related to the 36.9% of the
Atlas facility and 50% of the Egypt facility that we do not own.
Methanex-produced methanol includes any volume produced by Chile
using natural gas supplied from Argentina under a tolling
arrangement ("Tolling Volume"). There has been no Tolling Volume
produced since the fourth quarter of 2015.
2 Methanex average non-discounted posted
price represents the average of our non-discounted posted prices in
North America, Europe and Asia Pacific weighted by sales volume.
Current and historical pricing information is available at
www.methanex.com.
3 Average realized price is calculated as
revenue, excluding commissions earned and the Egypt non-controlling
interest share of revenue, but including an amount representing our
share of Atlas revenue, divided by the total sales volume of
Methanex-produced and purchased methanol, but excluding Tolling
Volume.
A reconciliation from net income (loss)
attributable to Methanex shareholders to Adjusted net income (loss)
and the calculation of Adjusted net income (loss) per common share
is as follows:
|
Three Months Ended |
|
Six Months Ended |
($
millions except number of shares and per share amounts) |
Jun 30 2017 |
Mar 31 2017 |
Jun 30 2016 |
|
Jun 30 2017 |
Jun 30 2016 |
Net income (loss)
(attributable to Methanex shareholders) |
$ |
84 |
|
$ |
132 |
|
$ |
(3 |
) |
|
$ |
216 |
|
$ |
(26 |
) |
Mark-to-market impact
of share-based compensation, net of tax |
(10 |
) |
8 |
|
(7 |
) |
|
(2 |
) |
(8 |
) |
Argentina gas
settlement, net of tax |
— |
|
— |
|
(21 |
) |
|
— |
|
(21 |
) |
Adjusted net income (loss) |
$ |
74 |
|
$ |
140 |
|
$ |
(31 |
) |
|
$ |
214 |
|
$ |
(55 |
) |
Diluted weighted
average shares outstanding (millions) |
88 |
|
90 |
|
90 |
|
|
89 |
|
90 |
|
Adjusted
net income (loss) per common share |
$ |
0.85 |
|
$ |
1.56 |
|
$ |
(0.34 |
) |
|
$ |
2.40 |
|
$ |
(0.62 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- We recorded net income attributable to Methanex shareholders of
$84 million during the second quarter of 2017 compared to net
income of $132 million in the first quarter of 2017. The decrease
in earnings is primarily due to a decrease in our average realized
methanol price during the second quarter. Our average realized
price decreased to $327 per tonne for the second quarter of 2017
from $365 per tonne for the first quarter of 2017.
- We recorded Adjusted EBITDA of $174 million for the second
quarter of 2017 compared with $267 million for the first quarter of
2017. Adjusted net income was $74 million for the second quarter of
2017 compared to Adjusted net income of $140 million for the first
quarter of 2017.
- Total sales volume for the second quarter of 2017 was 2,474,000
tonnes compared with 2,572,000 tonnes for the first quarter of
2017. Sales of Methanex-produced methanol were 1,790,000 tonnes in
the second quarter of 2017 compared with 1,756,000 tonnes in the
first quarter of 2017.
- Cash flows from operating activities in the second quarter of
2017 were $250 million compared with $221 million for the first
quarter of 2017, an increase of $29 million. Cash flows from
operating activities in the quarter increased despite a decrease in
Adjusted EBITDA primarily as a result of a reduction in non-cash
working capital.
- Our planned capital expenditures directed towards maintenance,
turnarounds and catalyst changes for operations, including our
63.1% share of Atlas and 50% of Egypt, is currently estimated to be
approximately $40 million to the end of 2017.
- We announced today that the Board of Directors approved an
amendment to the normal course issuer bid which increases the
number of common shares that may be purchased from 4,492,141 to
6,152,358 common shares, representing 10% of the public float at
the time of the announcement of the bid and the maximum number of
common shares that may be purchased under this bid. To date we have
repurchased 3,755,000 common shares under the current bid for
approximately $168 million.
- During the second quarter of 2017 we paid a $0.30 per common
share dividend to shareholders for a total of $26 million.
PRODUCTION HIGHLIGHTS
|
Q2 2017 |
Q1 2017 |
Q2 2016 |
|
YTD Q2 2017 |
YTD Q2 2016 |
(thousands of tonnes) |
Operating Capacity 1 |
Production |
Production |
Production |
|
Production |
Production |
New Zealand 2 |
608 |
|
350 |
|
533 |
|
577 |
|
|
883 |
|
1,086 |
|
Geismar (USA) |
500 |
|
437 |
|
493 |
|
527 |
|
|
930 |
|
1,010 |
|
Trinidad (Methanex
interest) 3 |
500 |
|
449 |
|
396 |
|
417 |
|
|
845 |
|
730 |
|
Egypt (50%
interest) |
158 |
|
159 |
|
159 |
|
53 |
|
|
318 |
|
128 |
|
Medicine Hat
(Canada) |
150 |
|
159 |
|
118 |
|
123 |
|
|
277 |
|
282 |
|
Chile 4 |
220 |
|
60 |
|
167 |
|
73 |
|
|
227 |
|
173 |
|
|
2,136 |
|
1,614 |
|
1,866 |
|
1,770 |
|
|
3,480 |
|
3,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Operating capacity includes only those
facilities which are currently capable of operating, but excludes
any portion of an asset that is underutilized due to a lack of
natural gas feedstock over a prolonged period of time. Our current
annual operating capacity is 8.5 million tonnes, including 0.9
million tonnes related to our Chile operations. The operating
capacity of our production facilities may be higher than original
nameplate capacity as, over time, these figures have been adjusted
to reflect ongoing operating efficiencies at these facilities.
Actual production for a facility in any given year may be higher or
lower than operating capacity due to a number of factors, including
natural gas composition or the age of the facility's catalyst.
2 The operating capacity of New Zealand is made up of the
two Motunui facilities and the Waitara Valley facility.
3 The operating capacity of Trinidad is made up of the
Titan (100% interest) and Atlas (63.1% interest) facilities.
4 The production capacity of our Chile I and IV facilities
is 1.7 million tonnes annually assuming access to natural gas
feedstock.
Key production and operational highlights during
the second quarter include:
- New Zealand production was 350,000 tonnes, impacted mainly as a
result of a planned turnaround at the Motunui 1 facility.
- Geismar production was 437,000 tonnes, impacted by planned
maintenance activities.
- Trinidad production was 449,000 tonnes. We continue to
experience gas curtailments in Trinidad with gas availability in
the second quarter of 2017 at improved levels compared to the first
quarter of 2017.
- Egypt production was 159,000 tonnes (Methanex share). The plant
continued to run at high rates in the quarter.
- Medicine Hat production was 159,000 tonnes. The plant was shut
down for repairs for part of the first quarter of 2017 and since
restart has operated at high rates.
- Chile production was 60,000 tonnes, produced using only natural
gas supply from Chile. Production was impacted by lower gas
deliveries during the southern hemisphere winter months and a
mechanical issue.
CONFERENCE CALL
A conference call is scheduled for July 27, 2017
at 12:00 noon ET (9:00 am PT) to review these second quarter
results. To access the call, dial the conferencing operator ten
minutes prior to the start of the call at (416) 340-2216, or toll
free at (800) 273-9672. A simultaneous audio-only webcast of the
conference call can be accessed from our website at
www.methanex.com. A playback version of the conference call will be
available until August 10, 2017 at (905) 694-9451, or toll free at
(800) 408-3053. The passcode for the playback version is 2610963#.
The webcast will be available on our website for two weeks
following the call.
ABOUT METHANEX
Methanex is a Vancouver-based, publicly traded
company and is the world’s largest producer and supplier of
methanol to major international markets. Methanex shares are listed
for trading on the Toronto Stock Exchange in Canada under the
trading symbol "MX" and on the NASDAQ Global Market in the United
States under the trading symbol "MEOH".
FORWARD-LOOKING INFORMATION WARNING
This second quarter 2017 press release contains
forward-looking statements with respect to us and the chemical
industry. By its nature, forward-looking information is subject to
numerous risks and uncertainties, some of which are beyond the
Company's control. Readers are cautioned that undue reliance should
not be placed on forward-looking information as actual results may
vary materially from the forward-looking information. Methanex does
not undertake to update, correct or revise any forward-looking
information as a result of any new information, future events or
otherwise, except as may be required by applicable law. Refer to
Forward-Looking Information Warning in the second quarter 2017
Management's Discussion and Analysis for more information which is
available from the Investor Relations section of our website at
www.methanex.com, the Canadian Securities Administrators' SEDAR
website at www.sedar.com and on the United States Securities
and Exchange Commission's EDGAR website at www.sec.gov.
NON-GAAP MEASURES
The Company has used the terms Adjusted EBITDA,
Adjusted net income (loss), Adjusted net income (loss) per common
share, Adjusted revenue, and operating income throughout this
document. These items are non-GAAP measures that do not have any
standardized meaning prescribed by GAAP. These measures represent
the amounts that are attributable to Methanex Corporation
shareholders and are calculated by excluding the mark-to-market
impact of share-based compensation as a result of changes in our
share price and the impact of certain items associated with
specific identified events. Refer to Additional Information -
Supplemental Non-GAAP measures on page 12 of the Company's MD&A
for the period ended June 30, 2017 for reconciliations to the
most comparable GAAP measures. Unless otherwise indicated, the
financial information presented in this release is prepared in
accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB").
For further information, contact:
Sandra Daycock
Director, Investor Relations
Methanex Corporation
604-661-2600
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