For the second quarter of 2019, Methanex (TSX:MX) (NASDAQ:MEOH)
reported net income attributable to Methanex shareholders of $50
million ($0.51 per common share on a diluted basis) compared to net
income of $38 million ($0.50 per common share on a diluted basis)
in the first quarter of 2019. Adjusted EBITDA for the second
quarter of 2019 was $146 million and Adjusted net income was $26
million ($0.34 per common share). This compares with Adjusted
EBITDA of $194 million and Adjusted net income of $56 million
($0.73 per common share) for the first quarter of 2019.
John Floren, President and CEO of Methanex,
commented, "Our second quarter Adjusted EBITDA reflects lower
sales of Methanex-produced methanol, slightly lower average
realized prices and higher costs compared to the first quarter.
Sales of Methanex-produced methanol were lower in the second
quarter compared to the first quarter of 2019 due to the timing of
inventory flows which impacted our mix of produced versus purchased
product sales. Our average realized price was $326 per tonne
compared to $331 per tonne in the first quarter. Our costs per
tonne declined in the second quarter compared to the first quarter;
however, a lower proportion of Methanex-produced methanol sales
resulted in higher costs overall. In addition, we incurred higher
logistics costs and higher selling and administrative expenses
related to events during the quarter."
"We were very pleased to announce that we
reached a final investment decision to construct a 1.8 million
tonne facility in Geismar, Louisiana adjacent to our Geismar 1 and
Geismar 2 facilities. We believe that Geismar 3 will create
significant long-term value for shareholders. Compared to a
standalone US Gulf greenfield plant, this project benefits from
substantial capital and operating cost advantages, and we expect
will deliver outstanding returns. We believe we are well positioned
to complete this project. The Company has a strong balance sheet
and a robust and flexible financing plan, a rigorous and
well-defined execution plan, and an experienced team in place to
execute the project."
"We returned $75 million of excess cash to
shareholders through our regular dividend and share repurchases in
the second quarter. To June 30, 2019, we have
repurchased 1,069,893 common shares, of the 3,863,298
authorized, for approximately $53 million since the start of our
normal course issuer bid on March 18, 2019."
“We have $228 million of cash on hand at
the end of the second quarter, a revolving credit facility and a
strong balance sheet. Our balanced approach to capital
allocation remains unchanged. We believe we are well positioned to
meet our financial commitments, execute our growth projects in
Louisiana and Chile, and deliver on our commitment to return excess
cash to shareholders through dividends and share repurchases,"
Floren said.
FURTHER INFORMATIONThe
information set forth in this news release summarizes Methanex's
key financial and operational data for the second quarter of 2019.
It is not a complete source of information for readers and is not
in any way a substitute for reading the second quarter 2019
Management’s Discussion and Analysis ("MD&A") dated
July 31, 2019 and the unaudited condensed consolidated interim
financial statements for the period ended June 30, 2019, both
of which are available from the Investor Relations section of our
website at www.methanex.com. The MD&A and the unaudited
condensed consolidated interim financial statements for the period
ended June 30, 2019 are also available on the Canadian
Securities Administrators' SEDAR website at www.sedar.com and
on the United States Securities and Exchange Commission's EDGAR
website at www.sec.gov.
FINANCIAL AND OPERATIONAL DATA
|
Three Months Ended |
|
Six Months Ended |
($ millions except per share amounts and where noted) |
Jun 30 2019 |
Mar 31 2019 |
Jun 30 2018 |
|
Jun 30 2019 |
Jun 30 2018 |
Production (thousands of
tonnes) (attributable to Methanex shareholders) |
1,820 |
1,808 |
1,648 |
|
3,628 |
3,591 |
Sales volume (thousands of
tonnes) |
|
|
|
|
|
|
Methanex-produced methanol |
1,669 |
1,921 |
1,729 |
|
3,590 |
3,613 |
Purchased methanol |
716 |
473 |
709 |
|
1,189 |
1,322 |
Commission sales |
216 |
329 |
329 |
|
545 |
650 |
Total sales volume 1 |
2,601 |
2,723 |
2,767 |
|
5,324 |
5,585 |
|
|
|
|
|
|
|
Methanex average
non-discounted posted price ($ per tonne) 2 |
391 |
392 |
478 |
|
391 |
476 |
Average realized price ($ per
tonne) 3 |
326 |
331 |
405 |
|
329 |
403 |
|
|
|
|
|
|
|
Revenue |
734 |
742 |
950 |
|
1,476 |
1,912 |
Adjusted revenue |
777 |
799 |
972 |
|
1,576 |
1,959 |
Adjusted EBITDA |
146 |
194 |
275 |
|
340 |
581 |
Cash flows from operating
activities |
117 |
213 |
290 |
|
330 |
534 |
Adjusted net income |
26 |
56 |
143 |
|
82 |
314 |
Net income (attributable to
Methanex shareholders) |
50 |
38 |
111 |
|
89 |
280 |
|
|
|
|
|
|
|
Adjusted net income per common
share |
0.34 |
0.73 |
1.75 |
|
1.07 |
3.79 |
Basic net income per common
share |
0.65 |
0.50 |
1.36 |
|
1.15 |
3.39 |
Diluted net income per common
share |
0.51 |
0.50 |
1.36 |
|
1.09 |
3.38 |
|
|
|
|
|
|
|
Common share information
(millions of shares) |
|
|
|
|
|
|
Weighted average number of common shares |
77 |
77 |
82 |
|
77 |
83 |
Diluted weighted average number of common shares |
77 |
77 |
82 |
|
77 |
83 |
Number of common shares outstanding, end of period |
76 |
77 |
80 |
|
76 |
80 |
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"). No Tolling Volume has been produced
in 2019. There were 48,000 MT of Tolling Volume in the second
quarter of 2018 and 88,000 MT of Tolling Volume for the six months
ended June 30, 2018.
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 attributable to
Methanex shareholders to Adjusted net income and the calculation of
Adjusted net income per common share is as follows:
|
Three Months Ended |
|
Six Months Ended |
($
millions except number of shares and per share amounts) |
Jun 30 2019 |
|
Mar 31 2019 |
|
Jun 30 2018 |
|
|
Jun 30 2019 |
|
Jun 30 2018 |
|
Net income (attributable to Methanex shareholders) |
$ |
50 |
|
$ |
38 |
|
$ |
111 |
|
|
$ |
89 |
|
$ |
280 |
|
Mark-to-market impact of
share-based compensation, net of tax |
(24 |
) |
18 |
|
32 |
|
|
(7 |
) |
34 |
|
Adjusted net income |
$ |
26 |
|
$ |
56 |
|
$ |
143 |
|
|
$ |
82 |
|
$ |
314 |
|
Diluted weighted average
shares outstanding (millions) |
77 |
|
77 |
|
82 |
|
|
77 |
|
83 |
|
Adjusted net income per common share |
$ |
0.34 |
|
$ |
0.73 |
|
$ |
1.75 |
|
|
$ |
1.07 |
|
$ |
3.79 |
|
- We recorded net income attributable to Methanex shareholders of
$50 million during the second quarter of 2019 compared to net
income of $38 million in the first quarter of 2019. The increase in
earnings is primarily due to the change in the mark-to-market
impact of share-based compensation, partially offset by a decrease
in sales of Methanex-produced methanol during the second quarter,
higher costs and a slight decrease in our average realized methanol
price.
- We recorded Adjusted EBITDA of $146 million for the second
quarter of 2019 compared with $194 million for the first quarter of
2019. The decrease in Adjusted EBITDA for the second quarter of
2019 compared to the first quarter of 2019 is primarily due to the
decrease in sales of Methanex-produced methanol, higher costs and a
slight decrease in our average realized methanol price. Adjusted
EBITDA for the first and second quarters of 2019 includes the
adoption of IFRS 16 which increased Adjusted EBITDA for the first
quarter of 2019 by $28 million and for the second quarter of 2019
by $27 million.
- Adjusted net income was $26 million for the second quarter of
2019 compared to Adjusted net income of $56 million for the first
quarter of 2019. The decrease in Adjusted net income is primarily
due to a decrease in sales of Methanex-produced methanol, higher
costs and the slight decrease in average realized price to $326 per
tonne for the second quarter of 2019 from $331 per tonne for the
first quarter of 2019.
- We produced 1,820,000 tonnes in the second quarter of 2019
compared to 1,808,000 tonnes for the first quarter of 2019.
- Total sales volume for the second quarter of 2019 was 2,601,000
tonnes compared with 2,723,000 tonnes for the first quarter of
2019. Sales of Methanex-produced methanol were 1,669,000 tonnes in
the second quarter of 2019 compared with 1,921,000 tonnes in the
first quarter of 2019. In the second quarter of 2019, production
exceeded sales of Methanex-produced methanol, resulting in a
151,000 tonne build of produced methanol inventory. This compares
to the first quarter of 2019, where sales of Methanex-produced
methanol exceeded production by 113,000 tonnes. An inventory build
or draw is a result of the timing of produced and purchased
methanol volume in and out of inventory.
- Total cash costs in the second quarter of 2019 were higher than
in the first quarter of 2019 by $30 million decreasing Adjusted
EBITDA. Total cash costs include the costs of both produced and
purchased methanol, logistics costs and other costs not included in
inventory. Our cash costs per tonne for both produced and purchased
methanol were lower for the second quarter of 2019 compared to the
first quarter of 2019, however the higher proportion of purchased
methanol and lower proportion of Methanex-produced methanol sold
resulted in higher cash costs and lower Adjusted EBITDA. Logistics
costs and other costs were also higher.
- On March 18, 2019 we commenced a normal course issuer bid to
purchase up to 3,863,298 common shares. To June 30, 2019, we have
repurchased 1,069,893 common shares under the bid for $52.8
million.
- During the second quarter of 2019 we paid a $0.36 per common
share quarterly dividend to shareholders for a total of $28
million.
- On July 19, 2019, we reached a final investment decision to
construct a 1.8 million tonne facility in Geismar, Louisiana
adjacent to our Geismar 1 and Geismar 2 facilities. Construction of
the Geismar 3 facility will begin later this year and operations
are targeted in the second half of 2022. The cost of the project is
expected to be between $1.3 to $1.4 billion including costs of
approximately $60 million incurred to date.
PRODUCTION HIGHLIGHTS
|
Q2 2019 |
Q1 2019 |
Q2 2018 |
YTD Q2 2019 |
YTD Q2 2018 |
|
|
|
|
|
|
(thousands of tonnes) |
Operating Capacity 1 |
Production |
Production |
Production |
Production |
Production |
New Zealand 2 |
608 |
446 |
437 |
252 |
883 |
739 |
USA (Geismar) |
500 |
530 |
405 |
518 |
935 |
1,031 |
Trinidad (Methanex interest)
3 |
500 |
384 |
429 |
442 |
813 |
901 |
Chile 4 |
430 |
290 |
241 |
128 |
531 |
294 |
Egypt (50% interest) |
158 |
15 |
141 |
165 |
156 |
330 |
Canada (Medicine Hat) |
150 |
155 |
155 |
143 |
310 |
296 |
|
2,346 |
1,820 |
1,808 |
1,648 |
3,628 |
3,591 |
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. 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 operating capacity of our Chile I and IV
facilities is 1.7 million tonnes annually assuming access to
natural gas feedstock. For 2018, our operating capacity in Chile
was 0.9 million tonnes. In the fourth quarter of 2018 we restarted
our 0.8 million tonne Chile IV plant that had been idle since
2007.
Key production and operational highlights during
the second quarter include:
- New Zealand produced 446,000 tonnes compared with 437,000
tonnes in the first quarter of 2019. Production continues to be
lower than operating capacity as a result of natural gas suppliers
completing planned and unplanned maintenance activities. We expect
these upstream maintenance activities to continue in the third
quarter.
- Geismar produced 530,000 tonnes during the second quarter of
2019 compared to 405,000 tonnes during the first quarter of 2019.
Production in Geismar for the second quarter of 2019 set a new
quarterly site record following lower production in the first
quarter of 2019 due to a scheduled turnaround of the Geismar 1
plant.
- Trinidad produced 384,000 tonnes (Methanex interest) compared
with 429,000 tonnes in the first quarter of 2019. Production in
Trinidad is lower in the second quarter of 2019 compared to the
first quarter of 2019 primarily as a result of the turnaround
completed in the Titan plant in April, and an unplanned production
outage in May at the Atlas plant. For Trinidad, we continue to
guide to approximately 85% operating rates.
- The Chile facilities produced 290,000 tonnes during the second
quarter of 2019 compared to 241,000 tonnes during the first quarter
of 2019. We have continued to receive reliable gas supply from our
partners in Chile and Argentina over the last few months and have
resolved the technical issues we faced with the start-up of our
Chile IV facility. Late in the second quarter of 2019, we commenced
the first phase of our refurbishment of our Chile I plant scheduled
to match expected lower natural gas deliveries during the southern
hemisphere winter months. Provided that we are able to secure
sufficient longer-term natural gas, we will complete the second
phase of the refurbishment over the coming years.
- The Egypt facility produced 30,000 tonnes (Methanex interest -
15,000 tonnes) in the second quarter of 2019 compared with 282,000
tonnes (Methanex interest - 141,000 tonnes) in the first quarter of
2019. During the quarter, the Egypt facility experienced an outage
and the plant remained off-line for the remainder of the second
quarter of 2019 for inspections and repair work. We expect to
restart the plant in August 2019. The losses related to the outage
are expected to be partially covered by insurance, however no
insurance recoveries have been recorded to date.
- Medicine Hat produced 155,000 tonnes during the second quarter
of 2019 and the first quarter of 2019.
CONFERENCE CALLA conference
call is scheduled for August 1, 2019 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 and will also be
available following the call. A playback version of the conference
call will be available until August 15, 2019 at (905) 694-9451, or
toll free at (800) 408-3053. The passcode for the playback version
is 6411726#.
ABOUT METHANEXMethanex 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
WARNINGThis second quarter 2019 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 2019
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 MEASURESThe Company
has used the terms Adjusted EBITDA, Adjusted net income, Adjusted
net income 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 15 of the
Company's MD&A for the period ended June 30, 2019 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:
Kim CampbellManager, Investor RelationsMethanex
Corporation604-661-2600
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