For the first quarter of 2022, Methanex (TSX:MX) (NASDAQ:MEOH)
reported net income attributable to Methanex shareholders of $119
million ($1.60 net income per common share on a diluted basis)
compared to net income of $201 million ($2.51 net income per common
share on a diluted basis) in the fourth quarter of 2021. The
decrease in net income is primarily due to the change in the
mark-to-market impact of share-based compensation, and the
effective tax rate which was lower in the fourth quarter of 2021
due to a reduced tax rate in Chile and the resolution of
outstanding tax matters not recurring in the first quarter of 2022.
Adjusted EBITDA for the first quarter of 2022 was $337 million, and
Adjusted net income was $159 million ($2.16 Adjusted net income per
common share). This compares with Adjusted EBITDA of $340 million
and Adjusted net income of $185 million ($2.43 Adjusted net income
per common share) for the fourth quarter of 2021.
The methanol market was tight entering the first
quarter of 2022 and supply continued to be constrained by low
industry operating rates. The conflict between Russia and the
Ukraine further increased global energy prices providing support
for the methanol cost curve. The average realized price in the
first quarter was $425 per tonne compared to $445 per tonne in the
fourth quarter of 2021.
Methanex generated strong cash flows ending the
quarter with $1.1 billion in cash and returned $101 million to
shareholders through the regular dividend and share repurchases.
The continued strength of the balance sheet combined with solid
methanol market fundamentals has allowed us to increase
distributions to shareholders going forward through the increases
to the dividend and Normal Course Issuer Bid.
John Floren, President & CEO of Methanex,
said, “I am pleased to see strong industry conditions continue
through the first quarter and into the second quarter. Our
continued strong financial performance allows us to continue our
long track record of returning excess cash to shareholders through
our increased dividend and upsized share buyback program. The G3
project is progressing well and as a fellow shareholder I am
excited about its cash flow generation capability and its
world-class CO2 intensity profile."
FURTHER INFORMATION
The information set forth in this news release
summarizes Methanex's key financial and operational data for the
first quarter of 2022. It is not a complete source of information
for readers and is not in any way a substitute for reading the
first quarter 2022 Management’s Discussion and Analysis
("MD&A") dated April 27, 2022 and the unaudited condensed
consolidated interim financial statements for the period ended
March 31, 2022, both of which are available from the Investor
Relations section of our website at www.methanex.com. The MD&A
and the unaudited condensed consolidated interim financial
statements for the period ended March 31, 2022 are also
available on the Canadian Securities Administrators' SEDAR website
at www.sedar.com and on the United States Securities and
Exchange Commission's EDGAR website at www.sec.gov.
FINANCIAL AND OPERATIONAL
DATA
|
Three Months Ended |
($ millions except per share amounts and where noted) |
Mar 312022 |
Dec 312021 |
Mar 312021 |
Production (thousands of tonnes) (attributable to Methanex
shareholders) 1 |
1,789 |
1,933 |
1,596 |
Sales volume (thousands of
tonnes) |
|
|
|
Methanex-produced methanol |
1,797 |
1,672 |
1,518 |
Purchased methanol |
682 |
810 |
1,014 |
Commission sales |
279 |
322 |
261 |
Total sales volume 1 |
2,758 |
2,804 |
2,793 |
|
|
|
|
Methanex average
non-discounted posted price ($ per tonne) 2 |
527 |
579 |
447 |
Average realized price ($ per
tonne) 3 4 |
425 |
445 |
363 |
|
|
|
|
Revenue |
1,176 |
1,253 |
1,016 |
Net income
(attributable to Methanex shareholders) |
119 |
201 |
105 |
Adjusted net income 4 |
159 |
185 |
82 |
Adjusted EBITDA 4 |
337 |
340 |
242 |
Cash flows from operating
activities |
325 |
283 |
167 |
|
|
|
|
Basic net income per common
share |
1.60 |
2.66 |
1.37 |
Diluted net income per common
share |
1.60 |
2.51 |
1.19 |
Adjusted net income per common
share 4 |
2.16 |
2.43 |
1.07 |
|
|
|
|
Common share information
(millions of shares) |
|
|
|
Weighted average number of common shares |
74 |
76 |
76 |
Diluted weighted average number of common shares |
74 |
76 |
76 |
Number of common shares outstanding, end of period |
73 |
75 |
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, China and Asia Pacific weighted by sales
volume. Current and historical pricing information is available at
www.methanex.com.
3 The Company has used Average realized
price ("ARP") throughout this document. This is a non-GAAP ratio
that does not have any standardized meaning prescribed by GAAP and
therefore is unlikely to be comparable to similar measures
presented by other companies. ARP 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. It is used by management
to assess the realized price per unit of methanol sold, and is
relevant in a cyclical commodity environment where revenue can
fluctuate in response to market prices.
4 Note that Adjusted net income, Adjusted net
income per common share, Adjusted EBITDA, and Average realized
price are non-GAAP measures and ratios that do not have any
standardized meaning prescribed by GAAP and therefore are unlikely
to be comparable to similar measures presented by other companies.
Refer to the Non-GAAP Measures section on page 13 for a description
of each non-GAAP measure.
A reconciliation from net income attributable to
Methanex shareholders to Adjusted EBITDA, Adjusted net income and
the calculation of Adjusted net income per common share is as
follows:
|
Three Months Ended |
($
millions) |
Mar 312022 |
|
|
Dec 312021 |
|
|
Mar 312021 |
|
Net income attributable to Methanex shareholders |
$ |
119 |
|
|
$ |
201 |
|
|
$ |
105 |
|
Mark-to-market impact of share-based compensation |
|
48 |
|
|
|
(19 |
) |
|
|
(25 |
) |
Depreciation and amortization |
|
92 |
|
|
|
87 |
|
|
|
90 |
|
Finance costs |
|
34 |
|
|
|
34 |
|
|
|
39 |
|
Finance income and other expenses |
|
— |
|
|
|
4 |
|
|
|
(1 |
) |
Income tax expense |
|
42 |
|
|
|
22 |
|
|
|
30 |
|
Earnings of associate adjustment |
|
21 |
|
|
|
26 |
|
|
|
14 |
|
Non-controlling interests adjustment |
|
(19 |
) |
|
|
(15 |
) |
|
|
(10 |
) |
Adjusted EBITDA (attributable to Methanex shareholders) |
$ |
337 |
|
|
$ |
340 |
|
|
$ |
242 |
|
|
Three Months Ended |
($
millions except number of shares and per share amounts) |
Mar 312022 |
|
Dec 312021 |
|
|
Mar 312021 |
|
Net income attributable to Methanex shareholders |
$ |
119 |
|
$ |
201 |
|
|
$ |
105 |
|
Mark-to-market impact of share-based compensation, net of tax |
|
40 |
|
|
(16 |
) |
|
|
(23 |
) |
Adjusted net income |
$ |
159 |
|
$ |
185 |
|
|
$ |
82 |
|
Diluted weighted average shares outstanding (millions) |
|
74 |
|
|
76 |
|
|
|
76 |
|
Adjusted net income per common share |
$ |
2.16 |
|
$ |
2.43 |
|
|
$ |
1.07 |
|
-
We recorded net income attributable to Methanex shareholders of
$119 million in the first quarter of 2022 compared to net income of
$201 million in the fourth quarter of 2021. The decrease in net
income is primarily due to the change in the mark-to-market impact
of share-based compensation, and the effective tax rate which was
lower in the fourth quarter of 2021 due to a reduced tax rate in
Chile and the resolution of outstanding tax matters not recurring
in the first quarter of 2022.
- We recorded
Adjusted EBITDA of $337 million for the first quarter of 2022
compared to $340 million for the fourth quarter of 2021. We
recorded Adjusted net income of $159 million for the first quarter
of 2022 compared to Adjusted net income of $185 million for the
fourth quarter of 2021. Adjusted EBITDA for the first quarter of
2022 are comparable to the fourth quarter of 2021 as the modest
decrease in our average realized methanol price to $425 per tonne
from $445 per tonne was primarily offset by lower costs due to a
higher proportion of Methanex-produced methanol sales and the
methanol price impact on our methanol-linked gas costs. Adjusted
net income for the first quarter of 2022 is lower compared to the
fourth quarter of 2021 as the effective tax rate which was lower in
the fourth quarter of 2021 due to reduced tax rate in Chile and
resolution of outstanding tax matters not recurring in the first
quarter of 2022.
- We sold
2,758,000 tonnes in the first quarter of 2022 compared to 2,804,000
tonnes for the fourth quarter of 2021. Sales of Methanex-produced
methanol were 1,797,000 tonnes in the first quarter of 2022
compared to 1,672,000 tonnes in the fourth quarter of 2021.
-
Production for the first quarter of 2022 was 1,789,000 tonnes
compared to 1,933,000 tonnes for the fourth quarter of 2021.
Production is lower for the first quarter of 2022 primarily due to
unplanned and planned outages at our Geismar, Egypt and Atlas
facilities.
-
Construction on our highly advantaged Geismar 3 project continues
on plan and is well-positioned to be completed on-time and
on-budget by the end of 2023 or early 2024. Our capital cost
estimate for the project is $1.25 to $1.35 billion and we have
spent $620 million to the end of March 31, 2022 (all amounts before
capitalized interest). Geismar 3's world-class CO2 intensity
profile will enhance our current asset portfolio and help us meet
our recently published commitment to reduce our greenhouse gas
emissions intensity.
-
In the third quarter of 2021 we commenced a normal course issuer
bid to repurchase up to 3,810,464 common shares. To March 31,
2022, we have repurchased 3,304,540 common shares for
$155 million. On April 27, 2022 the Board approved an increase
to the normal course issuer bid for an incremental 2,283,707
shares, for a total of 6,094,171 shares, which increases the normal
course issuer bid to 10% of our public float.
-
In the first quarter of 2022 we paid a $0.125 per common share
quarterly dividend to shareholders for a total of $9 million. On
April 27, 2022 we announced a 16% increase in our quarterly
dividend to $0.145 per common share. The increased dividend will
apply to the dividend payable on June 30, 2022.
-
At March 31, 2022, we have a strong liquidity position
including a cash balance of $1.1 billion and $600 million of
undrawn backup liquidity.
PRODUCTION HIGHLIGHTS
|
Q1 2022 |
Q4 2021 |
Q1 2021 |
|
|
|
|
(thousands of tonnes) |
Operating Capacity 1 |
Production |
Production |
Production |
New Zealand 2 |
550 |
386 |
405 |
369 |
USA (Geismar) |
550 |
556 |
605 |
422 |
Trinidad (Methanex interest)
3 |
490 |
258 |
296 |
275 |
Chile |
425 |
324 |
334 |
221 |
Egypt (50% interest) |
158 |
104 |
144 |
148 |
Canada
(Medicine Hat) |
160 |
161 |
149 |
161 |
|
2,333 |
1,789 |
1,933 |
1,596 |
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 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 since the expiry of its gas
contract with the National Gas Company of Trinidad and Tobago
Limited ("NGC"). We continue to engage with the NGC to negotiate
terms for a new gas contract for Titan.
Key production and operational highlights during the first
quarter and production outlook for 2022 include:
- New Zealand
produced 386,000 tonnes compared to 405,000 tonnes in the fourth
quarter of 2021. In New Zealand, our production was lower in the
first quarter of 2022 compared to the fourth quarter of 2021 due to
lower gas deliveries. Based on our outlook for natural gas in New
Zealand, we estimate production for 2022 to be approximately 1.5
million tonnes.
- Geismar produced
556,000 tonnes in the first quarter of 2022 compared to 605,000
tonnes in the fourth quarter of 2021. Geismar production was lower
for the first quarter of 2022 compared to the fourth quarter of
2021 as production was impacted by minor unplanned outages at both
Geismar 1 and 2 during the first quarter.
- Atlas produced
258,000 tonnes (Methanex interest) in the first quarter of 2022
compared to 296,000 tonnes in the fourth quarter of 2021.
Production in Trinidad was lower in the first quarter of 2022
compared to the fourth quarter of 2021 due to a minor unplanned
outage at our Atlas plant. Titan remains idled indefinitely.
- Chile produced
324,000 tonnes in the first quarter of 2022 compared to 334,000
tonnes in the fourth quarter of 2021. Production for the first
quarter of 2022 is comparable to the fourth quarter of 2021 as our
Chile IV plant ran continuously through both quarters, as both
periods fall within the Southern hemisphere summer months, when
domestic natural gas demand is lower. We expect to have sufficient
gas to operate both Chile plants to the end of April 2022,
following which we anticipate operating one plant through the
Southern hemisphere winter. We estimate Chile production in 2022 to
be approximately 1 million tonnes.
- Egypt produced
208,000 tonnes (Methanex interest - 104,000 tonnes) in the first
quarter of 2022 compared to 288,000 tonnes (Methanex interest -
144,000 tonnes) in the fourth quarter of 2021. Production in Egypt
was lower in the first quarter of 2022 compared to the fourth
quarter of 2021 due to a planned 20 day outage in the first
quarter.
- Medicine Hat
produced 161,000 tonnes in the first quarter of 2022 compared to
149,000 tonnes in the fourth quarter of 2021. Production for the
first quarter of 2022 is slightly higher compared to the fourth
quarter of 2021 as the plant did not experience any of the weather
related constraints faced in the fourth quarter of 2021.
CONFERENCE CALL
A conference call is scheduled for April 28,
2022 at 11:00 am ET (8:00 am PT) to review these first 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 2971996#. A
simultaneous audio-only webcast of the conference call can be
accessed from our website at
www.methanex.com/investor-relations/events and will also be
available 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 first quarter 2022 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 2022
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 and Average realized price throughout this document. These
items are non-GAAP measures and ratios 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 -
Non-GAAP Measures on page 13 of the Company's MD&A for the
period ended March 31, 2022 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:
Sarah HerriottDirector, Investor RelationsMethanex
Corporation604-661-2600
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