For the second quarter of 2022, Methanex (TSX:MX) (NASDAQ:MEOH)
reported net income attributable to Methanex shareholders of $125
million ($1.41 net income per common share on a diluted basis)
compared to net income of $119 million ($1.60 net income per common
share on a diluted basis) in the first quarter of 2022. Net income
was higher compared to the prior quarter primarily due to the
change in the mark-to-market impact of share-based compensation due
to changes in Methanex's share price. This was offset by the impact
of lower sales of Methanex-produced methanol and higher gas and
logistics costs. Adjusted EBITDA for the second quarter of 2022 was
$243 million, and Adjusted net income was $84 million ($1.16
Adjusted net income per common share). This compares with Adjusted
EBITDA of $337 million and Adjusted net income of $159 million
($2.16 Adjusted net income per common share) for the first quarter
of 2022.
Methanol industry operating rates improved
slightly in the second quarter of 2022 as a result of Iran
increasing production as its seasonal gas availability constraints
eased. This increase in production from Iran was partially offset
by plant turnarounds in Europe and Asia. Demand increased in the
second quarter of 2022 driven by high MTO operating rates and an
increase in traditional demand following the seasonal slowdown of
manufacturing activities during the Lunar New Year in China in the
first quarter. The average realized price in the second quarter was
$422 per tonne compared to $425 per tonne in the first quarter of
2022.
We ended the quarter with $878 million in cash
and returned $109 million to shareholders through the regular
dividend and share repurchases.
John Floren, President & CEO of Methanex,
said, “Our Geismar 3 project is progressing safely and I am happy
to report the narrowed capital cost range and updated timing for
first production. I am proud of the project team's excellent
execution to date which has allowed us to minimize the impact of
inflationary pressures and will enable us to deliver significant
shareholder value when G3 is operational in the fourth quarter of
2023. The recent 20% dividend increase, our third dividend increase
in the past twelve months, demonstrates our confidence in the cash
flow generating power of our well-positioned asset portfolio and
reinforces our commitment to return excess cash to
shareholders."
FURTHER INFORMATION
The information set forth in this news release
summarizes Methanex's key financial and operational data for the
second quarter of 2022. It is not a complete source of information
for readers and is not in any way a substitute for reading the
second quarter 2022 Management’s Discussion and Analysis
("MD&A") dated July 27, 2022 and the unaudited condensed
consolidated interim financial statements for the period ended
June 30, 2022, both of which are available from the Investor
Relations section of our website at www.methanex.com. The MD&A
and the unaudited condensed consolidated interim financial
statements for the period ended June 30, 2022 are also
available on the Canadian Securities Administrators' SEDAR website
at www.sedar.com and on the United States Securities and Exchange
Commission's EDGAR website at www.sec.gov.
FINANCIAL AND OPERATIONAL
DATA
|
Three Months Ended |
|
Six Months Ended |
($ millions except per share amounts and where noted) |
Jun 302022 |
Mar 312022 |
Jun 302021 |
|
Jun 302022 |
Jun 302021 |
Production (thousands of tonnes) (attributable to Methanex
shareholders)1 |
1,551 |
1,789 |
1,505 |
|
3,340 |
3,101 |
Sales volume (thousands of
tonnes) |
|
|
|
|
|
|
Methanex-produced methanol |
1,634 |
1,797 |
1,582 |
|
3,431 |
3,100 |
Purchased methanol |
798 |
682 |
903 |
|
1,480 |
1,917 |
Commission sales |
260 |
279 |
345 |
|
539 |
606 |
Total sales volume1 |
2,692 |
2,758 |
2,830 |
|
5,450 |
5,623 |
|
|
|
|
|
|
|
Methanex average
non-discounted posted price ($ per tonne)2 |
548 |
527 |
466 |
|
534 |
456 |
Average realized price ($ per
tonne)3 4 |
422 |
425 |
376 |
|
424 |
369 |
|
|
|
|
|
|
|
Revenue |
1,137 |
1,176 |
1,068 |
|
2,313 |
2,084 |
Net income (attributable to
Methanex shareholders) |
125 |
119 |
107 |
|
244 |
211 |
Adjusted net income4 |
84 |
159 |
95 |
|
244 |
176 |
Adjusted EBITDA4 |
243 |
337 |
262 |
|
580 |
504 |
Cash flows from operating
activities |
105 |
325 |
243 |
|
431 |
410 |
|
|
|
|
|
|
|
Basic net income per common
share |
1.74 |
1.60 |
1.40 |
|
3.34 |
2.77 |
Diluted net income per common
share |
1.41 |
1.60 |
1.31 |
|
3.28 |
2.51 |
Adjusted net income per common
share4 |
1.16 |
2.16 |
1.24 |
|
3.32 |
2.31 |
|
|
|
|
|
|
|
Common share information
(millions of shares) |
|
|
|
|
|
|
Weighted average number of common shares |
72 |
74 |
76 |
|
73 |
76 |
Diluted weighted average number of common shares |
72 |
74 |
76 |
|
73 |
76 |
Number of common shares outstanding, end of period |
71 |
73 |
76 |
|
71 |
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 14 of our second
quarter MD&A dated July 27, 2022 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 |
|
Six Months Ended |
($
millions) |
Jun 302022 |
Mar 312022 |
Jun 302021 |
|
Jun 302022 |
Jun 302021 |
Net income attributable to Methanex shareholders |
$ |
125 |
|
$ |
119 |
|
$ |
107 |
|
|
$ |
244 |
|
$ |
211 |
|
Mark-to-market impact of share-based compensation |
|
(47 |
) |
|
48 |
|
|
(12 |
) |
|
|
1 |
|
|
(37 |
) |
Depreciation and amortization |
|
94 |
|
|
92 |
|
|
95 |
|
|
|
186 |
|
|
185 |
|
Finance costs |
|
33 |
|
|
34 |
|
|
34 |
|
|
|
67 |
|
|
73 |
|
Finance income (loss) and other expenses |
|
3 |
|
|
— |
|
|
(3 |
) |
|
|
3 |
|
|
(3 |
) |
Income tax expense |
|
37 |
|
|
42 |
|
|
30 |
|
|
|
79 |
|
|
60 |
|
Earnings of associate adjustment |
|
18 |
|
|
21 |
|
|
26 |
|
|
|
39 |
|
|
39 |
|
Non-controlling interests adjustment |
|
(20 |
) |
|
(19 |
) |
|
(15 |
) |
|
|
(39 |
) |
|
(24 |
) |
Adjusted EBITDA (attributable to Methanex shareholders) |
$ |
243 |
|
$ |
337 |
|
$ |
262 |
|
|
$ |
580 |
|
$ |
504 |
|
|
Three Months Ended |
|
Six Months Ended |
($
millions except number of shares and per share amounts) |
Jun 302022 |
Mar 312022 |
Jun 302021 |
|
Jun 302022 |
Jun 302021 |
Net income attributable to Methanex shareholders |
$ |
125 |
|
$ |
119 |
$ |
107 |
|
|
$ |
244 |
$ |
211 |
|
Mark-to-market impact of share-based compensation, net of tax |
|
(41 |
) |
|
40 |
|
(12 |
) |
|
|
— |
|
(35 |
) |
Adjusted net income |
$ |
84 |
|
$ |
159 |
$ |
95 |
|
|
$ |
244 |
$ |
176 |
|
Diluted weighted average shares outstanding (millions) |
|
72 |
|
|
74 |
|
76 |
|
|
|
73 |
|
76 |
|
Adjusted net income per common share |
$ |
1.16 |
|
$ |
2.16 |
$ |
1.24 |
|
|
$ |
3.32 |
$ |
2.31 |
|
-
We recorded net income attributable to Methanex shareholders of
$125 million in the second quarter of 2022 compared to net income
of $119 million in the first quarter of 2022. Net income was higher
compared to the prior quarter primarily due to the change in the
mark-to-market impact of share-based compensation due to changes in
Methanex's share price. This was offset by the impact of lower
sales of Methanex-produced methanol, higher natural gas costs for
unhedged production in North America and higher logistics costs
attributable to higher bunker fuel pricing during the second
quarter.
- We recorded
Adjusted EBITDA of $243 million for the second quarter of 2022
compared to $337 million for the first quarter of 2022. We recorded
Adjusted net income of $84 million for the second quarter of 2022
compared to Adjusted net income of $159 million for the first
quarter of 2022. Adjusted EBITDA and Adjusted net income for the
second quarter of 2022 were lower than the first quarter of 2022
primarily due to lower sales of Methanex-produced methanol, higher
natural gas costs for unhedged production in North America and
higher logistics costs attributable to higher bunker fuel
pricing.
- We sold
2,692,000 tonnes in the second quarter of 2022 compared to
2,758,000 tonnes for the first quarter of 2022. Sales of
Methanex-produced methanol were 1,634,000 tonnes in the second
quarter of 2022 compared to 1,797,000 tonnes in the first quarter
of 2022.
-
Production for the second quarter of 2022 was 1,551,000 tonnes
compared to 1,789,000 tonnes for the first quarter of 2022.
Production was lower for the second quarter of 2022 primarily due
to lower production in New Zealand and Chile.
-
We have continued construction on our highly advantaged Geismar 3
project and recently completed a review of the capital cost and
schedule. Based on the review, first methanol production is now
expected in the fourth quarter of 2023 and the upper band of the
capital cost range has been lowered by $50 million to $1.3 billion.
The remaining capital spend of $525 to $575 million is fully funded
with cash on hand. Geismar 3's world-class CO2 intensity profile
will enhance our current asset portfolio and help us meet our
commitment to reduce our greenhouse gas emissions intensity.
- To June 30,
2022, we have repurchased 5,315,384 common shares of the 6,094,171
permitted under our current normal course issuer bid for
$253 million. In the second quarter of 2022, we returned $99
million to shareholders through the normal course issuer bid. We
completed the bid in July 2022.
-
In the second quarter of 2022 we paid a $0.145 per common share
quarterly dividend to shareholders for a total of $10 million. On
July 14, 2022 we announced a 20% increase in our quarterly dividend
to $0.175 per common share. The increased dividend will apply to
the dividend payable on September 30, 2022.
-
At June 30, 2022, we have a strong liquidity position
including a cash balance of $878 million and $600 million of
undrawn backup liquidity.
PRODUCTION HIGHLIGHTS
|
Q2 2022 |
Q1 2022 |
Q2 2021 |
YTD Q2 2022 |
YTD Q2 2021 |
(thousands of tonnes) |
Operating Capacity1 |
Production |
Production |
Production |
Production |
Production |
New Zealand2 |
550 |
244 |
386 |
306 |
630 |
675 |
USA (Geismar) |
550 |
556 |
556 |
484 |
1,112 |
906 |
Trinidad (Methanex
interest)3 |
490 |
249 |
258 |
294 |
507 |
569 |
Chile |
425 |
197 |
324 |
128 |
521 |
349 |
Egypt (50% interest) |
158 |
150 |
104 |
134 |
254 |
282 |
Canada
(Medicine Hat) |
160 |
155 |
161 |
159 |
316 |
320 |
|
2,333 |
1,551 |
1,789 |
1,505 |
3,340 |
3,101 |
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 second
quarter and production outlook for 2022 include:
- New Zealand
produced 244,000 tonnes compared to 386,000 tonnes in the first
quarter of 2022. In New Zealand, our production was lower in the
second quarter of 2022 compared to the first quarter of 2022 as we
primarily operated one plant due to a longer than forecasted
planned turnaround in May and June of the Maui gas field which
restricted gas availability during the quarter. Based on production
to date and our outlook for natural gas in New Zealand, we estimate
production for 2022 to be approximately 1.3 million tonnes.
- Geismar produced
556,000 tonnes in both the first and second quarters of 2022.
- Atlas produced
249,000 tonnes (Methanex interest) in the second quarter of 2022
compared to 258,000 tonnes in the first quarter of 2022. Titan
remains idled indefinitely.
- Chile produced
197,000 tonnes in the second quarter of 2022 compared to 324,000
tonnes in the first quarter of 2022. Production for the second
quarter of 2022 was lower than the first quarter of 2022 as our
Chile plants ran at reduced rates or were shut down for a portion
of the second quarter due to seasonal gas limitations during the
Southern hemisphere winter months, when domestic natural gas demand
is high. We expect to operate one plant through the remainder of
the Southern hemisphere winter. We estimate Chile production in
2022 to be approximately 1 million tonnes.
- Egypt produced
300,000 tonnes (Methanex interest - 150,000 tonnes) in the second
quarter of 2022 compared to 208,000 tonnes (Methanex interest -
104,000 tonnes) in the first quarter of 2022. Production in Egypt
was higher in the second quarter of 2022 compared to the first
quarter of 2022 due to a planned 20 day outage in the first
quarter.
- Medicine Hat
produced 155,000 tonnes in the second quarter of 2022 compared to
161,000 tonnes in the first quarter of 2022. Production for the
second quarter of 2022 was similar to the first quarter.
CONFERENCE CALL
A conference call is scheduled for July 28, 2022
at 11:00 am ET (8:00 am PT) to review these second 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 2066193#. 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 second 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 second 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, Adjusted net income 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 14 of
the Company's MD&A for the period ended June 30, 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
Methanex (NASDAQ:MEOH)
Historical Stock Chart
From May 2024 to Jun 2024
Methanex (NASDAQ:MEOH)
Historical Stock Chart
From Jun 2023 to Jun 2024