For the first quarter of 2020, Methanex (TSX:MX) (NASDAQ:MEOH)
reported net income attributable to Methanex shareholders of $23
million ($0.21 net income per common share on a diluted basis)
compared to net income of $9 million ($0.12 net income per common
share on a diluted basis) in the fourth quarter of 2019. Adjusted
EBITDA for the first quarter of 2020 was $138 million and Adjusted
net income was $8 million ($0.10 Adjusted net income per common
share). This compares with Adjusted EBITDA of $136 million and
Adjusted net income of $10 million ($0.13 Adjusted net income per
common share) for the fourth quarter of 2019.
First Quarter ResultsIn the
first quarter of 2020, we estimate that global methanol demand
declined by approximately 7% compared to the fourth quarter of
2019. The decline was due to impacts from the COVID-19 pandemic
combined with a sharply lower oil price environment.
The Adjusted EBITDA we recorded in the first
quarter of 2020 was similar to the fourth quarter of 2019 and
reflects a higher average realized price, partially offset by
slightly lower sales volume of Methanex-produced methanol. In
addition, the Company's fourth quarter 2019 Adjusted EBITDA results
benefited from a $25 million insurance recovery, reflecting our 50%
share in the Egypt facility, associated with the production outage
experienced in Egypt in 2019. Adjusted EBITDA for the first quarter
of 2020 includes an additional $5 million insurance recovery for
the final settlement, reflecting our 50% share in the Egypt
facility.
Business UpdateJohn Floren,
President and CEO of Methanex, commented, “We are navigating
extraordinary times as the COVID-19 pandemic has created
unprecedented turmoil and uncertainty in people’s lives and in the
global economy. Our number one priority is the safety of our
employees, contractors and communities where we do business.
Fortunately, our team is safe and healthy.”
“Our manufacturing operations have not been
impacted by local government restrictions and we are able to
operate in all of our plant locations. We have moved to minimum
staffing levels at our manufacturing sites and the majority of our
employees are working remotely. Our operations and global supply
chain are running effectively and have not been significantly
impacted by COVID-19."
"I want to thank our team members around the
world for their tremendous dedication and agility. I am incredibly
proud of our team who are safely producing methanol, with a limited
number of people on site, and managing our global supply chain to
deliver secure and reliable supply to our customers, mostly working
remotely.”
Given the considerable uncertainty we face, we
are planning for a wide range of scenarios, including ones in which
we see a deeper and more prolonged reduction in methanol demand and
low prices, while positioning ourselves to deliver long-term value
when global markets recover.
We have taken a number of steps to protect our
business in this environment:
- Idled our Titan plant in Trinidad
and Chile IV plant to respond to lower methanol demand;
- Deferred approximately $500 million
in capital spending on the Geismar 3 project for up to 18
months;
- Reduced 2020 maintenance capital
spending by $30 million;
- Increased financial flexibility
through a $436 million draw on our credit facilities; and
- Reduced our quarterly dividend by
90%, which represents approximately $100 million in annualized cash
savings.
In addition, we are working with our banking
partners to obtain flexibility on certain financial covenants of
our existing $300 million committed revolving credit facility and
$800 million non-revolving construction facility. We have agreed on
key parameters with our lead bank and are working with the other
members of the bank syndicate to finalize these changes to the
credit facilities, which is expected in the second half of May.
We ended the quarter with a strong liquidity
position of $823 million in cash on the balance sheet. We have no
near-term debt maturities. As we navigate this challenging
environment, we are focused on cash preservation and continue to
evaluate all capital and operating spending.
OutlookWe expect methanol
demand to be lower in the second quarter compared to the first
quarter due to the impact of COVID-19 and a low oil price
environment. It is not possible to accurately predict the degree of
the impact at this stage as the full extent and duration of the
COVID-19 pandemic and low oil price environment is uncertain.
Mr. Floren, President and CEO of Methanex,
concluded, “We anticipate that the coming months will be
challenging and expect the negative impact of COVID-19 and low oil
prices will be significant in the second quarter of 2020. As a
result, we expect our financial results in the second quarter will
be lower than the first quarter. We remain focused on operating our
plants safely and reliably, delivering secure and reliable supply
to our customers and protecting our balance sheet during this very
uncertain time.”
FURTHER INFORMATIONThe
information set forth in this news release summarizes Methanex's
key financial and operational data for the first quarter of 2020.
It is not a complete source of information for readers and is not
in any way a substitute for reading the first quarter 2020
Management’s Discussion and Analysis ("MD&A") dated May 5,
2020 and the unaudited condensed consolidated interim financial
statements for the period ended March 31, 2020, both of which
are available from the Investor Relations section of our website at
www.methanex.com. The MD&A and the unaudited condensed
consolidated interim financial statements for the period ended
March 31, 2020 are also available on the Canadian Securities
Administrators' SEDAR website at www.sedar.com and on the
United States Securities and Exchange Commission's EDGAR website at
www.sec.gov.
FINANCIAL AND OPERATIONAL DATA
|
Three Months Ended |
($ millions except per share amounts and where noted) |
Mar 31 2020 |
|
Dec 31 2019 |
|
Mar 31 2019 |
|
Production (thousands of
tonnes) (attributable to Methanex shareholders) |
2,007 |
|
2,124 |
|
1,808 |
|
Sales volume (thousands of
tonnes) |
|
|
|
Methanex-produced methanol |
1,976 |
|
2,056 |
|
1,921 |
|
Purchased methanol |
548 |
|
623 |
|
473 |
|
Commission sales |
264 |
|
307 |
|
329 |
|
Total sales volume 1 |
2,788 |
|
2,986 |
|
2,723 |
|
|
|
|
|
Methanex average
non-discounted posted price ($ per tonne) 2 |
325 |
|
307 |
|
392 |
|
Average realized price ($ per
tonne) 3 |
267 |
|
256 |
|
331 |
|
|
|
|
|
Revenue 4 |
745 |
|
770 |
|
902 |
|
Adjusted revenue |
676 |
|
690 |
|
800 |
|
Adjusted EBITDA |
138 |
|
136 |
|
194 |
|
Cash flows from operating
activities |
142 |
|
114 |
|
213 |
|
Adjusted net income |
8 |
|
10 |
|
56 |
|
Net income (attributable to
Methanex shareholders) |
23 |
|
9 |
|
38 |
|
|
|
|
|
Adjusted net income per common
share |
0.10 |
|
0.13 |
|
0.73 |
|
Basic net income per common
share |
0.30 |
|
0.12 |
|
0.50 |
|
Diluted net income per common
share |
0.21 |
|
0.12 |
|
0.50 |
|
|
|
|
|
Common share information
(millions of shares) |
|
|
|
Weighted average number of common shares |
76 |
|
76 |
|
77 |
|
Diluted weighted average number of common shares |
76 |
|
76 |
|
77 |
|
Number of common shares outstanding, end of period |
76 |
|
76 |
|
77 |
|
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. |
|
|
|
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. |
|
|
|
4 |
|
Revenue for the three months ended December 31, 2019 and March 31,
2019 have been restated as compared to revenue reported in our
quarterly MD&A and condensed quarterly financial statements
issued for 2019 based on a restatement for the recognition of
revenue on Atlas-produced methanol. |
|
|
|
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 |
($
millions except number of shares and per share amounts) |
Mar 31 2020 |
|
Dec 31 2019 |
|
Mar 31 2019 |
|
Net income (attributable to Methanex shareholders) |
$ |
23 |
|
$ |
9 |
|
$ |
38 |
|
Mark-to-market impact of
share-based compensation, net of tax |
(15 |
) |
1 |
|
18 |
|
Adjusted net income |
$ |
8 |
|
$ |
10 |
|
$ |
56 |
|
Diluted weighted average
shares outstanding (millions) |
76 |
|
76 |
|
77 |
|
Adjusted net income per common share |
$ |
0.10 |
|
$ |
0.13 |
|
$ |
0.73 |
|
- We recorded net income attributable
to Methanex shareholders of $23 million during the first quarter of
2020 compared to net income of $9 million in the fourth quarter of
2019. Net income attributable to Methanex shareholders for the
first quarter of 2020 includes a final insurance recovery of $4
million (Methanex share, net of tax) in addition to the $18 million
(Methanex share, net of tax) recorded in the fourth quarter related
to the 2019 Egypt outage. Excluding insurance recoveries, net
income attributable to Methanex shareholders increased for the
first quarter of 2020 compared to the fourth quarter of 2019 due to
the change relating to mark-to-market share-based compensation,
higher average realized methanol prices, partially offset by lower
sales of Methanex-produced methanol.
- We recorded Adjusted EBITDA of $138
million for the first quarter of 2020 compared with $136 million
for the fourth quarter of 2019. Adjusted EBITDA for the first
quarter of 2020 includes a final insurance recovery of $5 million
(Methanex share) in addition to the $25 million (Methanex share)
recorded in the fourth quarter related to the 2019 Egypt outage.
Excluding insurance recoveries, Adjusted EBITDA for the first
quarter of 2020 is higher than the fourth quarter of 2019 primarily
due to a higher average realized methanol price, partially offset
by lower sales of Methanex-produced methanol.
- Adjusted net income was $8 million
for the first quarter of 2020 compared to Adjusted net income of
$10 million for the fourth quarter of 2019. Adjusted net income
includes a final insurance recovery of $4 million (Methanex share,
net of tax) in the first quarter of 2020 adding to the $18 million
(Methanex share, net of tax) recorded in the fourth quarter related
to the 2019 Egypt outage. Excluding insurance recoveries, Adjusted
net income for the first quarter of 2020 is higher than the fourth
quarter of 2019 primarily due to a higher average realized price,
partially offset by lower sales of Methanex-produced methanol.
- Total sales volume for the first
quarter of 2020 was 2,788,000 tonnes compared with 2,986,000 tonnes
for the fourth quarter of 2019. Sales of Methanex-produced methanol
were 1,976,000 tonnes in the first quarter of 2020 compared with
2,056,000 tonnes in the fourth quarter of 2019. In the first
quarter of 2020 total sales decreased by approximately 7% compared
to the fourth quarter of 2019, in-line with the decrease in
methanol industry demand, primarily attributable to the impact of
COVID-19 and sharply lower oil price environment.
- Production for the first quarter of
2020 was 2,007,000 tonnes compared with 2,124,000 tonnes for the
fourth quarter of 2019. The decrease in production for the first
quarter of 2020 was primarily a result of a small number of plant
outages, partially offset by increased production at Geismar.
- In March 2020, we drew $300 million
from our revolving credit facility and $136 million from our $800
million construction credit facility for the Geismar 3 project to
increase our cash position and preserve financial flexibility. We
ended the quarter with $823 million of cash on the balance
sheet.
- During the first quarter of 2020 we
paid a $0.36 per common share quarterly dividend to shareholders
for a total of $27 million.
PRODUCTION HIGHLIGHTS
|
Q1 2020 |
Q4 2019 |
|
Q1 2019 |
|
(thousands of tonnes) |
Operating Capacity 1 |
|
Production |
|
Production |
|
Production |
|
New Zealand 2 |
550 |
|
443 |
|
513 |
|
437 |
|
USA (Geismar) |
500 |
|
530 |
|
480 |
|
405 |
|
Trinidad (Methanex interest)
3 |
500 |
|
429 |
|
456 |
|
429 |
|
Chile |
430 |
|
319 |
|
373 |
|
241 |
|
Egypt (50% interest) |
158 |
|
133 |
|
151 |
|
141 |
|
Canada (Medicine Hat) |
150 |
|
153 |
|
151 |
|
155 |
|
|
2,288 |
|
2,007 |
|
2,124 |
|
1,808 |
|
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. The New Zealand
facilities are capable of producing up to 2.4 million tonnes
annually, depending on natural gas composition and availability. In
Q4 2019 we revised the Annual Operating Capacity from 2.4 million
tonnes to 2.2 million tonnes based on the current outlook for
available high CO2 natural gas. |
|
|
|
3 |
|
The operating capacity of Trinidad is made up of the Titan (100%
interest) and Atlas (63.1% interest) facilities. |
|
|
|
Key production and operational highlights during
the first quarter include:
- New Zealand produced 443,000 tonnes
compared with 513,000 tonnes in the fourth quarter of 2019.
Production was lower in the first quarter of 2020 compared to the
fourth quarter of 2019 due to upstream gas maintenance resulting in
lower gas deliveries to the plants and the Waitara Valley plant
being offline for repairs until early February 2020. Based on our
current contracted gas position, our production guidance for New
Zealand is approximately 85% operating rates in 2020, or
approximately 1.9 million tonnes annually.
- Geismar produced 530,000 tonnes
during the first quarter of 2020 compared to 480,000 tonnes during
the fourth quarter of 2019. We achieved higher production in the
first quarter of 2020 compared to the fourth quarter of 2019 as
both plants operated well throughout the quarter, whereas in the
fourth quarter of 2019 Geismar 2 experienced unplanned outages
which decreased production.
- Trinidad produced 429,000 tonnes
(Methanex interest) compared with 456,000 tonnes in the fourth
quarter of 2019. Production in Trinidad is lower in the first
quarter of 2020 compared to the fourth quarter of 2019 primarily
due to the Titan plant being idled effective March 16, 2020. As of
today, Titan remains idled and we anticipate lower production in
Trinidad for the second quarter of 2020 compared to the first
quarter of 2020 with only Atlas operating. Titan's interim gas
supply agreement with the National Gas Company of Trinidad and
Tobago Limited ("NGC") has expired and negotiations with the NGC
for a longer-term natural gas supply agreement are continuing.
- The Chile facilities produced
319,000 tonnes during the first quarter of 2020 compared to 373,000
tonnes during the fourth quarter of 2019. Production for the first
quarter of 2020 is lower compared to the fourth quarter of 2019
primarily due to a 45-day outage at the Chile IV plant during the
quarter, while Chile I operated at high rates throughout the
quarter. As of today, Chile IV remains idled and we anticipate
lower production in Chile for the second quarter of 2020 compared
to the first quarter of 2020 with only Chile I operating.
- The Egypt facility produced 266,000
tonnes (Methanex interest - 133,000 tonnes) in the first quarter of
2020 compared with 302,000 tonnes (Methanex interest - 151,000
tonnes) in the fourth quarter of 2019. Egypt production was lower
in the first quarter of 2020 compared to the fourth quarter of 2019
due to a planned maintenance outage in February.
- Medicine Hat produced 153,000
tonnes during the first quarter of 2020 compared to 151,000 tonnes
during the fourth quarter of 2019.
CONFERENCE CALLA conference
call is scheduled for May 6, 2020 at 11:00 am ET (8:00 am PT) to
review these first 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 May 22, 2020 at (905) 694-9451, or toll free at
(800) 408-3053. The passcode for the playback version is
6730557#.
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 first quarter 2020 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 first quarter 2020
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 (loss),
Adjusted net income (loss) per common share, Adjusted revenue and
operating income (loss) 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
March 31, 2020 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 CampbellDirector, Investor RelationsMethanex
Corporation604-661-2600
Methanex (NASDAQ:MEOH)
Historical Stock Chart
From May 2024 to Jun 2024
Methanex (NASDAQ:MEOH)
Historical Stock Chart
From Jun 2023 to Jun 2024