For the third quarter of 2021, Methanex (TSX:MX) (NASDAQ:MEOH)
reported net income attributable to Methanex shareholders of $71
million ($0.93 net income per common share on a diluted basis)
compared to net income of $107 million ($1.31 net income per common
share on a diluted basis) in the second quarter of 2021. The
decrease in net income is due to the change in the mark-to-market
impact of share-based compensation. Adjusted EBITDA for the third
quarter of 2021 was $264 million and Adjusted net income was $99
million ($1.29 Adjusted net income per common share). This compares
with Adjusted EBITDA of $262 million and Adjusted net income of $95
million ($1.24 Adjusted net income per common share) for the second
quarter of 2021.
Our Adjusted EBITDA results of $264 million,
reflecting a higher average realized price offset by lower sales of
Methanex-produced methanol, continue to highlight the significant
leverage that our earnings have to methanol prices. Methanol market
conditions remained tight with continuing industry supply
challenges through the third quarter of 2021. We increased our
average realized price to $390 per tonne in the third quarter, a
$14 per tonne increase compared to $376 per tonne in the second
quarter.
We ended the third quarter with $932 million in
cash. We recently finalized definitive agreements for our recently
announced strategic shipping partnership between Methanex,
Waterfront Shipping (a Methanex subsidiary) and Mitsui O.S.K.
Lines, Ltd. ("MOL") whereby MOL will acquire a 40% minority
interest in Waterfront Shipping for $145 million. The closing is
subject to all customary conditions being met, including regulatory
approval.
We recently restarted construction on our
Geismar 3 project, a 1.8 million tonne methanol plant adjacent to
our existing Geismar 1 and Geismar 2 plants. Our Geismar 3 project
has distinct project advantages and robust project economics that
will strengthen our asset portfolio and significantly increase our
future cash generation capability.
John Floren, President & CEO of Methanex,
said, “Our outlook for the methanol industry is positive, and we
believe that new industry supply will be needed to meet growing
methanol demand over the coming years. Our strategy of industry
leadership, low cost and operational excellence enables us to
generate robust free cash flow across the methanol price cycle. Our
capital allocation priorities remain the same. We are well
positioned to maintain our business, pursue value accretive growth
opportunities and continue our long track record of returning
excess cash to shareholders through a sustainable dividend and
share buybacks.”
FURTHER INFORMATION
The information set forth in this news release
summarizes Methanex's key financial and operational data for the
third quarter of 2021. It is not a complete source of information
for readers and is not in any way a substitute for reading the
third quarter 2021 Management’s Discussion and Analysis
("MD&A") dated October 27, 2021 and the unaudited
condensed consolidated interim financial statements for the period
ended September 30, 2021, 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 September 30, 2021 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 |
|
Nine Months Ended |
($
millions except per share amounts and where noted) |
Sep 302021 |
Jun 302021 |
Sep 302020 |
|
Sep 302021 |
Sep 302020 |
Production (thousands of tonnes) (attributable to Methanex
shareholders) 1 |
1,480 |
|
1,505 |
|
1,372 |
|
|
4,581 |
|
5,007 |
|
Sales volume (thousands of
tonnes) |
|
|
|
|
|
|
Methanex-produced methanol |
1,435 |
|
1,582 |
|
1,531 |
|
|
4,535 |
|
5,224 |
|
Purchased methanol |
1,023 |
|
903 |
|
836 |
|
|
2,940 |
|
1,802 |
|
Commission sales |
299 |
|
345 |
|
311 |
|
|
905 |
|
846 |
|
Total sales volume 1 |
2,757 |
|
2,830 |
|
2,678 |
|
|
8,380 |
|
7,872 |
|
|
|
|
|
|
|
|
Methanex average
non-discounted posted price ($ per tonne) 2 |
476 |
|
466 |
|
255 |
|
|
462 |
|
283 |
|
Average realized price ($ per
tonne) 3 |
390 |
|
376 |
|
217 |
|
|
376 |
|
233 |
|
|
|
|
|
|
|
|
Revenue |
1,078 |
|
1,068 |
|
581 |
|
|
3,162 |
|
1,839 |
|
Adjusted revenue |
963 |
|
937 |
|
515 |
|
|
2,822 |
|
1,644 |
|
Net income (loss)
(attributable to Methanex shareholders) |
71 |
|
107 |
|
(88 |
) |
|
282 |
|
(130 |
) |
Adjusted net income
(loss) |
99 |
|
95 |
|
(79 |
) |
|
275 |
|
(135 |
) |
Adjusted EBITDA |
264 |
|
262 |
|
40 |
|
|
768 |
|
210 |
|
Cash flows from operating
activities |
301 |
|
243 |
|
35 |
|
|
711 |
|
363 |
|
|
|
|
|
|
|
|
Basic net income (loss) per
common share |
0.93 |
|
1.40 |
|
(1.15 |
) |
|
3.70 |
|
(1.70 |
) |
Diluted net income (loss) per
common share |
0.93 |
|
1.31 |
|
(1.15 |
) |
|
3.62 |
|
(1.72 |
) |
Adjusted net income (loss) per
common share |
1.29 |
|
1.24 |
|
(1.03 |
) |
|
3.60 |
|
(1.77 |
) |
|
|
|
|
|
|
|
Common share information
(millions of shares) |
|
|
|
|
|
|
Weighted average number of common shares |
76 |
|
76 |
|
76 |
|
|
76 |
|
76 |
|
Diluted weighted average number of common shares |
76 |
|
76 |
|
76 |
|
|
76 |
|
76 |
|
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.
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 |
|
Nine Months Ended |
($
millions except number of shares and per share amounts) |
Sep 302021 |
Jun 302021 |
Sep 302020 |
|
Sep 302021 |
Sep 302020 |
Net income (loss) (attributable to Methanex shareholders) |
$ |
71 |
|
$ |
107 |
|
|
$ |
(88 |
) |
|
$ |
282 |
|
|
$ |
(130 |
) |
Mark-to-market impact of share-based compensation, net of tax |
28 |
|
(12 |
) |
|
9 |
|
|
(7 |
) |
|
(5 |
) |
Adjusted net income (loss) |
$ |
99 |
|
$ |
95 |
|
|
$ |
(79 |
) |
|
$ |
275 |
|
|
$ |
(135 |
) |
Diluted weighted average shares outstanding (millions) |
76 |
|
76 |
|
|
76 |
|
|
76 |
|
|
76 |
|
Adjusted net income (loss) per common share |
$ |
1.29 |
|
$ |
1.24 |
|
|
$ |
(1.03 |
) |
|
$ |
3.60 |
|
|
$ |
(1.77 |
) |
- We recorded net
income attributable to Methanex shareholders of $71 million during
the third quarter of 2021 compared to net income of $107 million in
the second quarter of 2021. The decrease in net income is due to
the change in the mark-to-market impact of share-based
compensation. We recorded Adjusted EBITDA of $264 million for the
third quarter of 2021 compared with $262 million for the second
quarter of 2021.
- We recorded
Adjusted net income of $99 million for the third quarter of 2021
compared to Adjusted net income of $95 million for the second
quarter of 2021. Adjusted EBITDA and Adjusted net income for the
third quarter of 2021 are marginally higher than the second quarter
of 2021 primarily due to the increase in our average realized
methanol price to $390 per tonne from $376 per tonne, offset by
lower sales of Methanex-produced methanol.
- We sold 2,757,000 tonnes in the
third quarter of 2021 compared to 2,830,000 tonnes for the second
quarter of 2021. Sales of Methanex-produced methanol were 1,435,000
tonnes in the third quarter of 2021 compared with 1,582,000 tonnes
in the second quarter of 2021.
-
Production for the third quarter of 2021 was 1,480,000 tonnes
compared with 1,505,000 tonnes for the second quarter of 2021.
Production is lower for the third quarter of 2021 primarily due to
the temporary idling of one plant in New Zealand which was
partially offset by higher operating rates in Egypt.
-
We recently restarted construction on our Geismar 3 project, a 1.8
million tonne methanol plant adjacent to our existing Geismar 1 and
Geismar 2 plants. The project has been significantly de-risked and
is well-positioned to be completed on-time and on budget. We have
capitalized $455 million on the project, before capitalized
interest and finance charges. We estimate $800-900 million of
capital expenditure to complete the project, for a total of $1.25 -
$1.35 billion. Commercial operations are targeted at the end of
2023 or early 2024.
- During the third
quarter of 2021 the Board of Directors approved a 5% normal course
issuer bid to repurchase up to 3,810,464 common shares. To
September 30, 2021, we repurchased 85,607 common shares under
the bid for $4 million.
- In the third
quarter of 2021 we paid a $0.125 per common share quarterly
dividend to shareholders for a total of $10 million.
- At
September 30, 2021, we have a strong liquidity position
including a cash balance of $932 million and $900 million of
undrawn backup liquidity.
PRODUCTION HIGHLIGHTS
|
Q3 2021 |
Q2 2021 |
Q3 2020 |
YTD Q3 2021 |
YTD Q3 2020 |
(thousands of tonnes) |
Operating Capacity 1 |
Production |
Production |
Production |
Production |
Production |
New Zealand 2 |
550 |
|
268 |
|
306 |
|
340 |
|
943 |
|
1,233 |
|
USA (Geismar) 3 |
550 |
|
478 |
|
484 |
|
513 |
|
1,384 |
|
1,484 |
|
Trinidad (Methanex interest)
4 |
490 |
|
296 |
|
294 |
|
167 |
|
865 |
|
837 |
|
Chile |
425 |
|
124 |
|
128 |
|
118 |
|
473 |
|
641 |
|
Egypt (50% interest) |
158 |
|
155 |
|
134 |
|
153 |
|
437 |
|
433 |
|
Canada
(Medicine Hat) |
160 |
|
159 |
|
159 |
|
81 |
|
479 |
|
379 |
|
|
2,333 |
|
1,480 |
|
1,505 |
|
1,372 |
|
4,581 |
|
5,007 |
|
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. We review and update the operating capacity of
our production facilities on a regular basis based on historical
performance.
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. Annual Operating Capacity is currently 2.2 million
tonnes based on the natural gas composition expected for the
foreseeable future. The Waitara Valley plant is currently idled
indefinitely due to insufficient natural gas availability.
3 For the comparative 2020 periods presented,
our operating capacity in Geismar was 2.0 million tonnes. In the
fourth quarter of 2020, we completed the debottlenecking project at
our Geismar 1 facility and in Q2 2021 we completed the
debottlenecking project at our Geismar 2 facility. As a result, we
have increased our operating capacity for 2021 by 0.2 million
tonnes to 2.2 million tonnes.
4 The operating capacity of Trinidad is made up
of the Titan (100% interest) and Atlas (63.1% interest) facilities.
The Titan plant remains idled indefinitely.
Key production and operational highlights during the third
quarter and production outlook for 2021 include:
- New Zealand
produced 268,000 tonnes compared with 306,000 tonnes in the second
quarter of 2021. In New Zealand, our production levels were lower
in the third quarter of 2021 compared to the second quarter of 2021
as the short term commercial arrangement with Genesis Energy to
idle one plant and make natural gas available to support a tight
New Zealand electricity market completed in late August.
Subsequently, both Motunui plants have been operating.
- As a result of
the above and the previous idling of Waitara Valley, we now
estimate production in 2021 to be 1.3 million tonnes compared to
our production of 1.7 million tonnes in 2020. The upstream gas
sector in New Zealand is completing several field development
projects that could improve gas availability over the coming
years.
- Geismar produced
478,000 tonnes during the third quarter of 2021 compared to 484,000
tonnes during the second quarter of 2021. Geismar production is
comparable for the second and third quarters of 2021 as the
benefits of increased capacity for a full quarter following the
completion of our Geismar 2 debottlenecking project during the
second quarter were offset due to a precautionary outage during
Hurricane Ida for approximately two weeks. Hurricane Ida did not
damage the site and following the precautionary outage both plants
returned to production. The Geismar 1 and Geismar 2 debottlenecking
projects increased our operating capacity for our Geismar
facilities by 10%, to 2.2 million tonnes on an annual basis.
- Trinidad
produced 296,000 tonnes (Methanex interest) during the third
quarter of 2021 compared with 294,000 tonnes in the second quarter
of 2021. Production levels in Trinidad were similar in the third
quarter of 2021 compared to the second quarter of 2021 as we
continued to run our Atlas plant at high operating rates. Based on
current gas deliveries, we estimate Trinidad production in 2021 of
approximately 1.1 million tonnes (Methanex interest). Titan remains
idled indefinitely.
- Chile produced
124,000 tonnes during the third quarter of 2021 compared to 128,000
tonnes during the second quarter of 2021. Production for the third
quarter of 2021 is similar compared to the second quarter of 2021
as we experienced lower gas availability during the second and
third quarters of 2021 over the Southern hemisphere winter months
when seasonal demand for natural gas in the region is at its peak.
Early in October, we restarted our Chile IV plant after idling the
plant in April 2020 in response to the global pandemic and then due
to lower gas availability. We expect to have sufficient gas to
operate both Chile plants through the Southern hemisphere summer
months to the end of April 2022. We estimate production in 2021 of
0.8 million tonnes.
- Egypt produced
310,000 tonnes (Methanex interest - 155,000 tonnes) in the third
quarter of 2021 compared to 268,000 tonnes (Methanex interest -
134,000 tonnes) in the second quarter of 2021. Production levels in
Egypt were higher in the third quarter compared to the second
quarter of 2021 due to improved operating rates. We expect to
receive 100% of our contracted gas supply for the foreseeable
future in Egypt.
- Medicine Hat
produced 159,000 tonnes during the second and third quarters of
2021.
CONFERENCE CALL
A conference call is scheduled for October 28,
2021 at 11:00 am ET (8:00 am PT) to review these third 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 1196073#. 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 November 27, 2021 at (905) 694-9451,
or toll free at (800) 408-3053. The passcode for the playback
version is 4105032#.
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 third quarter 2021 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 third quarter 2021
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 September 30, 2021 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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