For the fourth quarter of 2020, Methanex (TSX:MX) (NASDAQ:MEOH)
reported a net loss attributable to Methanex shareholders of $27
million ($0.35 net loss per common share on a diluted basis)
compared to a net loss of $88 million ($1.15 net loss per common
share on a diluted basis) in the third quarter of 2020. Adjusted
EBITDA for the fourth quarter of 2020 was $136 million and Adjusted
net income was $12 million ($0.15 Adjusted net income per common
share). This compares with Adjusted EBITDA of $40 million and an
Adjusted net loss of $79 million ($1.03 Adjusted net loss per
common share) for the third quarter of 2020.
For the year ended December 31, 2020,
Methanex reported a net loss attributable to Methanex shareholders
of $157 million ($2.06 net loss per common shares on a diluted
basis), Adjusted EBITDA of $346 million and an Adjusted net loss of
$123 million ($1.62 Adjusted net loss per common share). This
compares with net income attributable to Methanex shareholders of
$88 million ($1.01 net income per common share on a diluted basis),
Adjusted EBITDA of $566 million and Adjusted net income of $71
million ($0.93 Adjusted net income per common share) for the year
ended December 31, 2019.
In the fourth quarter of 2020, continued
improvement in global methanol demand, combined with various
methanol industry supply outages and the delayed start-up of new
industry capacity additions, led to tighter market conditions and
lower global inventory levels. As a result, methanol prices
increased by 30% in the fourth quarter, compared to the third
quarter of 2020, resulting in higher Adjusted EBITDA.
For the full year of 2020, the impact from the
COVID-19 pandemic on the global economy and lower oil price
environment resulted in a sharp decline in methanol demand and
lower methanol prices in the second and third quarters, with some
recovery in the fourth quarter, impacting our financial results in
2020 compared to 2019.
John Floren, President and CEO of Methanex,
commented, “I am extremely proud of the work that our team has done
to deliver reliable methanol supply throughout the COVID-19
pandemic. Their performance underscores the tremendous agility and
resilience of our people and business model and gives us confidence
in our ability to continue to meet the demands of a very
challenging situation. We are encouraged by the early signs of
economic recovery that we saw starting in the second half of 2020,
and continue to regularly monitor and review the methanol demand
outlook and changes in the industry."
We took various steps in 2020 to preserve
liquidity and financial flexibility in the challenging economic
environment. We ended the year with $834 million in cash, a $300
million undrawn revolving credit facility and no debt maturities
until the end of 2024.
Our Geismar 3 project is a high-quality project
with substantial capital and operating cost advantages. The project
remains on temporary care and maintenance, with spending on the
project over the next nine months expected to be approximately $80
million. This amount reflects costs that were already committed and
the completion of activities that preserve flexibility to complete
the project in the future including key engineering activities and
procurement of critical path equipment. We have a robust decision
making process for evaluating the project and before deciding
whether to restart construction, management and our Board will need
to carefully consider many factors including the global economic
recovery and methanol industry outlook.
John Floren concluded, "We are pleased to see
continued improvement in methanol demand and prices although the
uncertain economic recovery path makes the near-term difficult to
forecast. We continue to believe that long-term methanol industry
fundamentals are strong and methanol demand will continue to
improve as the global economy fully recovers. For now, we continue
to prioritize liquidity and financial flexibility. We remain
well-positioned to generate significant long-term value as market
conditions improve."
FURTHER INFORMATIONThe
information set forth in this news release summarizes Methanex's
key financial and operational data for the fourth quarter of 2020.
It is not a complete source of information for readers and is not
in any way a substitute for reading the fourth quarter 2020
Management’s Discussion and Analysis ("MD&A") dated
January 27, 2021 and the unaudited condensed consolidated
interim financial statements for the period ended December 31,
2020, both of which are available from the Investor Relations
section of our website at www.methanex.com. The MD&A and the
unaudited condensed consolidated interim financial statements for
the period ended December 31, 2020 are also available on the
Canadian Securities Administrators' SEDAR website at
www.sedar.com and on the United States Securities and Exchange
Commission's EDGAR website at www.sec.gov.
FINANCIAL AND OPERATIONAL DATA
|
Three Months Ended |
|
Years Ended |
($
millions except per share amounts and where noted) |
Dec 312020 |
|
|
Sep 302020 |
|
|
Dec 312019 |
|
|
Dec 312020 |
|
|
Dec 312019 |
|
Production (thousands of tonnes) (attributable to Methanex
shareholders) 1 |
1,607 |
|
|
1,372 |
|
|
2,124 |
|
|
6,614 |
|
|
7,589 |
|
Sales volume (thousands of
tonnes) |
|
|
|
|
|
|
Methanex-produced methanol |
1,480 |
|
|
1,531 |
|
|
2,056 |
|
|
6,704 |
|
|
7,611 |
|
Purchased methanol |
1,192 |
|
|
836 |
|
|
623 |
|
|
2,994 |
|
|
2,492 |
|
Commission sales |
196 |
|
|
311 |
|
|
307 |
|
|
1,042 |
|
|
1,031 |
|
Total sales volume 1 |
2,868 |
|
|
2,678 |
|
|
2,986 |
|
|
10,740 |
|
|
11,134 |
|
|
|
|
|
|
|
|
Methanex average
non-discounted posted price ($ per tonne) 2 |
334 |
|
|
255 |
|
|
307 |
|
|
297 |
|
|
353 |
|
Average realized price ($ per
tonne) 3 |
282 |
|
|
217 |
|
|
256 |
|
|
247 |
|
|
295 |
|
|
|
|
|
|
|
|
Revenue 4 |
811 |
|
|
581 |
|
|
769 |
|
|
2,650 |
|
|
3,284 |
|
Adjusted revenue |
755 |
|
|
515 |
|
|
689 |
|
|
2,399 |
|
|
2,988 |
|
Net income (loss)
(attributable to Methanex shareholders) |
(27 |
) |
|
(88 |
) |
|
9 |
|
|
(157 |
) |
|
88 |
|
Adjusted net income
(loss) |
12 |
|
|
(79 |
) |
|
10 |
|
|
(123 |
) |
|
71 |
|
Adjusted EBITDA |
136 |
|
|
40 |
|
|
136 |
|
|
346 |
|
|
566 |
|
Cash flows from operating
activities |
98 |
|
|
35 |
|
|
114 |
|
|
461 |
|
|
515 |
|
|
|
|
|
|
|
|
Basic net income (loss) per
common share |
(0.35 |
) |
|
(1.15 |
) |
|
0.12 |
|
|
(2.06 |
) |
|
1.15 |
|
Diluted net income (loss) per
common share |
(0.35 |
) |
|
(1.15 |
) |
|
0.12 |
|
|
(2.06 |
) |
|
1.01 |
|
Adjusted net income (loss) per
common share |
0.15 |
|
|
(1.03 |
) |
|
0.13 |
|
|
(1.62 |
) |
|
0.93 |
|
|
|
|
|
|
|
|
Common share information
(millions of shares) |
|
|
|
|
|
|
Weighted average number of common shares |
76 |
|
|
76 |
|
|
76 |
|
|
76 |
|
|
77 |
|
Diluted weighted average number of common shares |
76 |
|
|
76 |
|
|
76 |
|
|
76 |
|
|
77 |
|
Number of common shares outstanding, end of period |
76 |
|
|
76 |
|
|
76 |
|
|
76 |
|
|
76 |
|
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 and
year ended December 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 (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 |
|
Years Ended |
($
millions except number of shares and per share amounts) |
|
Dec 312020 |
|
|
|
Sep 302020 |
|
|
|
Dec 312019 |
|
|
|
Dec 312020 |
|
|
|
Dec 312019 |
|
|
Net income (loss) (attributable to Methanex shareholders) |
$ |
(27 |
) |
|
$ |
(88 |
) |
|
$ |
9 |
|
|
$ |
(157 |
) |
|
$ |
88 |
|
|
Mark-to-market impact of share-based compensation, net of tax |
39 |
|
|
9 |
|
|
1 |
|
|
34 |
|
|
(17 |
) |
|
Adjusted net income (loss) |
$ |
12 |
|
|
$ |
(79 |
) |
|
$ |
10 |
|
|
$ |
(123 |
) |
|
$ |
71 |
|
|
Diluted weighted average shares outstanding (millions) |
76 |
|
|
76 |
|
|
76 |
|
|
76 |
|
|
77 |
|
|
Adjusted net income (loss) per common share |
$ |
0.15 |
|
|
$ |
(1.03 |
) |
|
$ |
0.13 |
|
|
$ |
(1.62 |
) |
|
$ |
0.93 |
|
|
- We recorded a
net loss attributable to Methanex shareholders of $27 million
during the fourth quarter of 2020 compared to a net loss of $88
million in the third quarter of 2020. The increase in earnings is
primarily due to higher realized prices, which was partially offset
by the mark-to-market impact of share-based compensation as a
result of the increase in Methanex share price in the fourth
quarter of 2020.
-
Adjusted EBITDA was $136 million for the fourth quarter of 2020
compared with $40 million for the third quarter of 2020. Adjusted
EBITDA for the fourth quarter of 2020 is higher than the third
quarter of 2020 due to higher realized prices, partially offset by
changes in the mix of produced and purchased methanol sold.
-
Adjusted net income was $12 million for the fourth quarter of 2020
compared to Adjusted net loss of $79 million for the third quarter
of 2020. The increase in earnings is primarily due to an increase
in average realized price and a decrease in finance costs due to a
one time make-whole interest charge related to the early redemption
of bonds in the third quarter.
- We sold 2,868,000
tonnes in the fourth quarter of 2020, an increase of 7% compared to
2,678,000 tonnes for the third quarter of 2020. Total sales
increased for the fourth quarter of 2020 due to the ongoing
recovery in methanol demand. Sales of Methanex-produced methanol
were 1,480,000 tonnes in the fourth quarter of 2020 compared with
1,531,000 tonnes in the third quarter of 2020.
-
Production for the fourth quarter of 2020 was 1,607,000 tonnes
compared with 1,372,000 tonnes for the third quarter of 2020. The
increase in production for the fourth quarter of 2020 was primarily
the result of higher production in New Zealand and Chile due to
improved gas availability, strong operating rates at Geismar, and
less impact from turnaround activities compared to the third
quarter.
- On January 7th,
2021, the Company announced that it expects its Titan facility in
Trinidad will remain idled indefinitely. As a result, the Company
has made the decision to restructure its Trinidad operations to
support a one-plant operation.
- We continue to
maintain a strong balance sheet, with a cash balance of $834
million and our revolving credit facility remains undrawn as at
December 31, 2020.
- During the fourth
quarter of 2020 we paid a $0.0375 per common share quarterly
dividend to shareholders for a total of $3 million.
PRODUCTION HIGHLIGHTS
(thousands of tonnes) |
Annual Operating Capacity1 |
|
2020Production |
|
2019Production |
|
Q4 2020 Production |
|
Q3 2020 Production |
|
Q4 2019 Production |
|
New Zealand 2 |
2,200 |
|
1,672 |
|
1,865 |
|
439 |
|
340 |
|
513 |
|
USA (Geismar) |
2,000 |
|
2,040 |
|
1,929 |
|
556 |
|
513 |
|
480 |
|
Trinidad (Methanex interest)
3 |
2,000 |
|
998 |
|
1,743 |
|
161 |
|
167 |
|
456 |
|
Chile |
1,720 |
|
836 |
|
1,050 |
|
195 |
|
118 |
|
373 |
|
Egypt (50% interest) |
630 |
|
578 |
|
392 |
|
145 |
|
153 |
|
151 |
|
Canada
(Medicine Hat) |
600 |
|
490 |
|
610 |
|
111 |
|
81 |
|
151 |
|
|
9,150 |
|
6,614 |
|
7,589 |
|
1,607 |
|
1,372 |
|
2,124 |
|
- 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.
- 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. Annual Operating
Capacity is currently 2.2 million tonnes based on the current
outlook for available high CO2 natural gas.
- 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 fourth quarter and production outlook for 2021 include:
- New Zealand
produced 439,000 tonnes compared with 340,000 tonnes in the third
quarter of 2020. In New Zealand, our production levels were higher
in the fourth quarter as we received higher gas deliveries compared
to the third quarter.
- Leading into
2021, our outlook for New Zealand production is uncertain as our
gas suppliers have recently advised that a major offshore gas field
which supplies the New Zealand market and underpins a portion of
our production, has experienced significant and unexpected
production declines, which will result in lower gas deliveries.
Given that gas deliveries are expected to be lower in 2021, we are
consolidating production at our two larger Motunui plants, which
have a combined operating capacity of 1.7 million tonnes, and
temporarily idling our smaller Waitara Valley plant. We estimate
production in 2021 of 1.5 to 1.6 million tonnes compared to our
production of 1.7 million tonnes in 2020.
- Geismar produced
556,000 tonnes during the fourth quarter of 2020 compared to
513,000 tonnes during the third quarter of 2020. Production for
Geismar is higher in the fourth quarter of 2020 compared to the
third quarter of 2020 as both plants operated without interruption
throughout the quarter with Geismar 1 also realizing the benefits
of the debottlenecking project completed early in the fourth
quarter. Our Geismar facilities are underpinned by an abundant
supply of North American natural gas.
- Trinidad
produced 161,000 tonnes (Methanex interest) during the fourth
quarter of 2020 compared with 167,000 tonnes in the third quarter
of 2020. Production levels in Trinidad were similar in the fourth
quarter compared to the third quarter as planned turnaround
activities at our Atlas facility impacted both quarters.
- For 2021, we
have been advised that upstream production declines, and the delay
of upstream maintenance work due to COVID-19, will result in lower
gas deliveries. It is unclear how long these lower gas deliveries
will persist. Based on current gas deliveries, we estimate Trinidad
production in 2021 of 0.9 million tonnes (Methanex share) compared
to our production of 1.0 million tonnes (Methanex share) in 2020.
All 2021 production is expected to come from the Atlas facility as
we announced earlier this month that we expect the Titan facility
will remain idled indefinitely because we have not been able to
reach an acceptable longer-term natural gas agreement.
- Chile produced
195,000 tonnes during the fourth quarter of 2020 compared to
118,000 tonnes during the third quarter of 2020. Production for the
fourth quarter of 2020 is higher compared to the third quarter of
2020 as we received higher gas deliveries. However, due to lower
gas deliveries later in the fourth quarter resulting from upstream
production declines in Argentina, we were unable to run both plants
in December. Our Chile IV plant remains idle today and it is
uncertain how long these lower gas deliveries will persist. We
estimate production in 2021 of 0.9 to 1.0 million tonnes annually
compared to our production of 0.8 million tonnes in 2020.
- Egypt production
was similar quarter-on-quarter with 290,000 tonnes (Methanex
interest - 145,000 tonnes) produced in the fourth quarter of 2020
and 306,000 tonnes (Methanex interest - 153,000 tonnes) in the
third quarter of 2020. We expect to receive 100% of our contracted
gas supply for the foreseeable future.
- Medicine Hat
produced 111,000 tonnes during the fourth quarter of 2020 compared
to 81,000 tonnes during the third quarter of 2020. Production for
the fourth quarter of 2020 is higher compared to the third quarter
of 2020 as a result of the completion of a scheduled turnaround of
the Medicine Hat plant that commenced in August 2020 and completed
in October 2020. Our Medicine Hat facilities are underpinned by an
abundant supply of Canadian natural gas.
- Our 2021
production is forecasted to be similar to 2020 production of 6.6
million tonnes, although actual production may vary by quarter
based on gas availability, planned outages, extended unplanned
outages and unanticipated factors.
CONFERENCE CALLA conference call is scheduled
for January 28, 2021 at 11:00 am ET (8:00 am PT) to review these
fourth quarter results. To access the call, dial the conferencing
operator fifteen minutes prior to the start of the call at (416)
340-2217, or toll free at (800) 806-5484. The passcode for the call
is 4043839#. 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 February 28, 2021 at
(905) 694-9451, or toll free at (800) 408-3053. The passcode for
the playback version is 1578447#.
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 fourth 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 fourth 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 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 (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 13 of the Company's MD&A
for the period ended December 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
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