Methanex Reports Stronger Fourth Quarter 2019 Results and Full Year Record Production Volume
January 29 2020 - 5:01PM
For the fourth quarter of 2019, Methanex (TSX:MX) (NASDAQ:MEOH)
reported net income attributable to Methanex shareholders of $9
million ($0.12 net income per common share on a diluted basis)
compared to a net loss of $10 million ($0.21 net loss per common
share on a diluted basis) in the third quarter of 2019. Adjusted
EBITDA for the fourth quarter of 2019 was $136 million and Adjusted
net income was $10 million ($0.13 Adjusted net income per common
share). This compares with Adjusted EBITDA of $90 million and an
Adjusted net loss of $21 million ($0.27 Adjusted net loss per
common share) for the third quarter of 2019.
Adjusted EBITDA for the fourth quarter includes
an insurance recovery associated with the production outage
experienced in Egypt from April to August 2019 of $25 million,
reflecting our 50% share in the Egypt facility. The insurance
recovery, net of tax, of $18 million is also included in net income
attributable to Methanex shareholders and Adjusted net income.
For the year ended December 31, 2019, Methanex
reported net income attributable to Methanex shareholders of $88
million ($1.01 net income per common shares on a diluted basis),
Adjusted EBITDA of $566 million and Adjusted net income of $71
million ($0.93 Adjusted net income per common share). This compares
with net income attributable to Methanex shareholders of $569
million ($6.92 net income per common share on a diluted basis),
Adjusted EBITDA of $1,071 million and Adjusted net income of $556
million ($6.86 Adjusted net income per common share) for the year
ended December 31, 2018.
John Floren, President and CEO of Methanex,
commented, “The higher Adjusted EBITDA we recorded in the fourth
quarter of 2019 compared to the third quarter reflects higher sales
volume of Methanex-produced methanol and improved costs, as well as
the insurance recovery associated with our Egypt facility, which
were partially offset by a decline in our average realized price.
Our average realized price declined by $16 per tonne to $256
dollars per tonne in the fourth quarter of 2019 from $272 dollars
per tonne that we realized in the third quarter.
"For the full year in 2019, we achieved record
production results which was overshadowed by the impact of lower
average realized pricing compared to 2018. We were very pleased to
achieve production of 7.6 million tonnes of methanol in 2019,
compared to 7.2 million tonnes in 2018, reflecting the significant
improvement we have seen in our Chile production capability with
both plants operating at high rates. These results reflect the
investments we have made over the past few years to substantially
increase our production capability and enhance our ability to
service our customers.”
“Also in 2019, we began the construction of our
Geismar 3 project, a 1.8 million tonne methanol plant located
adjacent to our existing facilities. We expect this project will
deliver outstanding returns based on its substantial capital and
operating cost advantages. We also continue to make progress on the
debottlenecking opportunities at our existing Geismar 1 and Geismar
2 facilities to increase production by approximately 10% over the
next couple of years."
"We returned $161 million to shareholders in
2019, including $27 million in the fourth quarter through our
regular quarterly dividend. We have $417 million of cash on the
balance sheet at the end of the fourth quarter. We continue to
prudently manage our business by maintaining a strong balance sheet
and sufficient liquidity to navigate the cyclical nature of our
industry."
"Our balanced approach to capital allocation
remains unchanged. We believe we are well positioned to meet our
financial commitments, execute our growth projects in Louisiana,
and deliver on our commitment to return excess cash to shareholders
through dividends and share repurchases," Floren said.
FURTHER INFORMATION
The information set forth in this news release
summarizes Methanex's key financial and operational data for the
fourth quarter of 2019. It is not a complete source of information
for readers and is not in any way a substitute for reading the
fourth quarter 2019 Management’s Discussion and Analysis
("MD&A") dated January 29, 2020 and the unaudited
condensed consolidated interim financial statements for the period
ended December 31, 2019, both of which are available from the
Investor Relations section of our website at www.methanex.com. The
MD&A and the unaudited condensed consolidated interim financial
statements for the period ended December 31, 2019 are also
available on the Canadian Securities Administrators' SEDAR website
at www.sedar.com and on the United States Securities and
Exchange Commission's EDGAR website at www.sec.gov.
FINANCIAL AND OPERATIONAL DATA
|
Three Months Ended |
|
Years Ended |
($ millions except per share amounts and where noted) |
Dec 31 2019 |
|
Sep 30 2019 |
|
Dec 31 2018 |
|
|
Dec 31 2019 |
|
Dec 31 2018 |
|
Production (thousands of
tonnes) (attributable to Methanex shareholders) |
2,124 |
|
1,837 |
|
1,885 |
|
|
7,589 |
|
7,211 |
|
Sales volume (thousands of
tonnes) |
|
|
|
|
|
|
|
|
|
|
|
Methanex-produced methanol |
2,056 |
|
1,965 |
|
1,599 |
|
|
7,611 |
|
7,002 |
|
Purchased methanol |
623 |
|
680 |
|
908 |
|
|
2,492 |
|
3,032 |
|
Commission sales |
307 |
|
179 |
|
245 |
|
|
1,031 |
|
1,174 |
|
Total sales volume 1 |
2,986 |
|
2,824 |
|
2,752 |
|
|
11,134 |
|
11,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Methanex average
non-discounted posted price ($ per tonne) 2 |
307 |
|
330 |
|
487 |
|
|
353 |
|
481 |
|
Average realized price ($ per
tonne) 3 |
256 |
|
272 |
|
401 |
|
|
295 |
|
405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
659 |
|
650 |
|
977 |
|
|
2,784 |
|
3,932 |
|
Adjusted revenue |
690 |
|
723 |
|
1,008 |
|
|
2,988 |
|
4,033 |
|
Adjusted EBITDA |
136 |
|
90 |
|
197 |
|
|
566 |
|
1,071 |
|
Cash flows from operating
activities |
114 |
|
71 |
|
218 |
|
|
515 |
|
980 |
|
Adjusted net income
(loss) |
10 |
|
(21 |
) |
90 |
|
|
71 |
|
556 |
|
Net income (loss)
(attributable to Methanex shareholders) |
9 |
|
(10 |
) |
161 |
|
|
88 |
|
569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income (loss) per
common share |
0.13 |
|
(0.27 |
) |
1.15 |
|
|
0.93 |
|
6.86 |
|
Basic net income (loss) per
common share |
0.12 |
|
(0.13 |
) |
2.07 |
|
|
1.15 |
|
7.07 |
|
Diluted net income (loss) per
common share |
0.12 |
|
(0.21 |
) |
1.68 |
|
|
1.01 |
|
6.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common share information
(millions of shares) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares |
76 |
|
76 |
|
78 |
|
|
77 |
|
80 |
|
Diluted weighted average number of common shares |
76 |
|
76 |
|
78 |
|
|
77 |
|
81 |
|
Number of common shares outstanding, end of period |
76 |
|
76 |
|
77 |
|
|
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. Methanex-produced
methanol includes any volume produced by Chile using natural gas
supplied from Argentina under a tolling arrangement ("Tolling
Volume"). No Tolling Volume has been produced in 2019. There was no
Tolling Volume in the fourth quarter of 2018 and 108,000 MT of
Tolling Volume for the year ended December 31, 2018. |
|
|
|
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, but excluding Tolling Volume. |
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 31 2019 |
|
Sep 30 2019 |
|
Dec 31 2018 |
|
|
Dec 31 2019 |
|
Dec 31 2018 |
|
Net income (loss) (attributable to Methanex shareholders) |
$ |
9 |
|
$ |
(10 |
) |
$ |
161 |
|
|
$ |
88 |
|
$ |
569 |
|
Mark-to-market impact of
share-based compensation, net of tax |
1 |
|
(11 |
) |
(71 |
) |
|
(17 |
) |
(13 |
) |
Adjusted net income (loss) 1 |
$ |
10 |
|
$ |
(21 |
) |
$ |
90 |
|
|
$ |
71 |
|
$ |
556 |
|
Diluted weighted average
shares outstanding (millions) |
76 |
|
76 |
|
78 |
|
|
77 |
|
81 |
|
Adjusted net income (loss) per common share 1 |
$ |
0.13 |
|
$ |
(0.27 |
) |
$ |
1.15 |
|
|
$ |
0.93 |
|
$ |
6.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- We recorded net income attributable
to Methanex shareholders of $9 million during the fourth quarter of
2019 compared to a net loss of $10 million in the third quarter of
2019. Within net income attributable to Methanex shareholders we
have recorded an insurance recovery of $18 million (Methanex share,
net of tax) in the fourth quarter related to the Egypt outage
experienced in the second and third quarters of the year. Excluding
the insurance recovery, the fourth quarter result was a net loss
attributable to Methanex shareholders of $9 million compared to a
net loss of $10 million in the third quarter of 2019. A decrease in
our average realized methanol price in the fourth quarter was
largely offset by higher sales of Methanex-produced methanol,
improved costs compared to the third quarter, and the change
relating to mark-to-market share-based compensation.
- We recorded Adjusted EBITDA of $136
million for the fourth quarter of 2019 compared with $90 million
for the third quarter of 2019. The increase in Adjusted EBITDA for
the fourth quarter of 2019 compared to the third quarter of 2019
includes a $25 million (Methanex share) insurance recovery related
to the Egypt outage, with the remaining increase primarily due to
higher sales of Methanex-produced methanol and improved costs
compared to the third quarter, offsetting a lower average realized
price. Adjusted EBITDA for 2019 includes the adoption of IFRS 16
which increased Adjusted EBITDA for the fourth quarter of 2019 by
$31 million, the third quarter of 2019 by $26 million and the year
ended December 31, 2019 by $112 million. The 2018 comparative
periods have not been adjusted for IFRS 16.
- Adjusted net income was $10 million
for the fourth quarter of 2019 compared to Adjusted net loss of $21
million for the third quarter of 2019. The increase in Adjusted net
income includes the insurance recovery of $18 million (Methanex
share, net of tax) related to the Egypt outage. The remaining
change is primarily due to higher sales of Methanex-produced
methanol and improved costs compared to the third quarter,
offsetting a lower average realized price.
- Total sales volume for the fourth
quarter of 2019 was 2,986,000 tonnes compared with 2,824,000 tonnes
for the third quarter of 2019. Sales of Methanex-produced methanol
were 2,056,000 tonnes in the fourth quarter of 2019 compared with
1,965,000 tonnes in the third quarter of 2019. In the fourth
quarter of 2019, production exceeded sales of Methanex-produced
methanol, resulting in a 68,000 tonne build of produced methanol
inventory. This compares to the third quarter of 2019, when sales
of Methanex-produced methanol exceeded production by 128,000
tonnes. An inventory build or draw is a result of the timing of
produced and purchased methanol volume in and out of
inventory.
- Production for the fourth quarter
of 2019 increased to 2,124,000 tonnes, a new quarterly record for
Methanex. This compares with 1,837,000 tonnes for the third quarter
of 2019. The increase in production was primarily driven by our
Chile facilities where both plants ran at higher rates and our
production for the quarter reached its highest level since the
second quarter of 2007, and by Egypt which returned to full
operating rates following the outage experienced in the second and
third quarters.
- During the fourth quarter we
reached an agreement for natural gas supply to our Chile facilities
that will underpin approximately 25% of a two-plant operation
through to the end of 2025. We expect that our current gas
agreements will allow for a two-plant operation in Chile during the
southern hemisphere summer months and up to a maximum of 75% of a
two-plant operation annually.
- We are currently constructing a new
1.8 million tonne methanol plant in Geismar, Louisiana adjacent to
our Geismar 1 and Geismar 2 facilities. The cost of the Geismar 3
project is expected to be between $1.3 to $1.4 billion, excluding
capitalized interest, with operations targeted for the second half
of 2022. Capitalized costs of approximately $152 million, excluding
capitalized interest of $4 million, have been incurred for the
project, life to date.
- During the fourth quarter of 2019 we paid a $0.36 per common
share quarterly dividend to shareholders for a total of $27
million.
- Total distributions to shareholders
in 2019 were $161 million including quarterly dividends and share
repurchases. In 2019 we repurchased 1,069,893 common shares under a
normal course issuer bid. No shares were repurchased in the fourth
quarter of 2019.
PRODUCTION HIGHLIGHTS
(thousands of tonnes) |
Annual Operating Capacity1 |
2019 Production |
2018Production |
Q4 2019 Production |
Q3 2019 Production |
Q4 2018 Production |
New Zealand 2 |
2,200 |
1,865 |
1,606 |
513 |
469 |
389 |
USA (Geismar) |
2,000 |
1,929 |
2,078 |
480 |
514 |
527 |
Trinidad (Methanex interest)
3 |
2,000 |
1,743 |
1,702 |
456 |
474 |
448 |
Chile 4 |
1,720 |
1,050 |
612 |
373 |
146 |
206 |
Egypt (50% interest) |
630 |
392 |
613 |
151 |
85 |
155 |
Canada (Medicine Hat) |
600 |
610 |
600 |
151 |
149 |
160 |
|
9,150 |
7,589 |
7,211 |
2,124 |
1,837 |
1,885 |
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. We
have revised the Annual Operating Capacity from 2.4 million tonnes
to 2.2 million tonnes in the current quarter 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. |
|
|
|
4 |
|
The
operating capacity of our Chile I and IV facilities is 1.7 million
tonnes annually assuming access to natural gas feedstock. For 2018,
our operating capacity in Chile was 0.9 million tonnes. In the
fourth quarter of 2018 we restarted our 0.8 million tonne Chile IV
plant that had been idle since 2007. |
Key production and operational highlights during
the fourth quarter include:
- New Zealand produced 513,000 tonnes
compared with 469,000 tonnes in the third quarter of 2019. We
achieved higher production in the fourth quarter of 2019 compared
to the third quarter of 2019 as we received higher gas deliveries.
In December 2019 we took the Waitara Valley plant offline to
complete unplanned repairs to be completed during the first quarter
of 2020. The plant remains offline today.
- Geismar produced 480,000 tonnes
during the fourth quarter of 2019 compared to 514,000 tonnes during
the third quarter of 2019. Production in the fourth quarter is
lower than the third quarter as Geismar 2 experienced unplanned
outages early in the quarter resulting in lost production of
approximately 45,000 tonnes.
- Trinidad produced 456,000 tonnes
(Methanex interest) compared with 474,000 tonnes in the third
quarter of 2019. Production in Trinidad is lower in the fourth
quarter of 2019 compared to the third quarter of 2019 as production
in the fourth quarter was impacted by unplanned outages at both
plants. For Trinidad, we continue to guide to approximately 85%
operating rates. During the fourth quarter we reached an interim
agreement with the National Gas Company of Trinidad and Tobago
Limited (“NGC”) for the supply of natural gas to our Titan methanol
facility for a one month period to January 31, 2020. We have
recently extended the term of the interim agreement to April 1,
2020 to continue operations at Titan while continuing negotiations
with NGC for a longer-term natural gas supply agreement.
- The Chile facilities produced
373,000 tonnes during the fourth quarter of 2019 compared to
146,000 tonnes during the third quarter of 2019. Production for the
fourth quarter of 2019 is higher compared to the third quarter of
2019 as both Chile plants ran at high rates. In the quarter, we
achieved our highest quarterly production from Chile since the
second quarter of 2007. Only the Chile IV plant operated during the
third quarter due to Chile I completing a refurbishment timed to
coincide with lower gas availability in Chile.
- The Egypt facility produced 302,000
tonnes (Methanex interest - 151,000 tonnes) in the fourth quarter
of 2019 compared with 170,000 tonnes (Methanex interest - 85,000
tonnes) in the third quarter of 2019. The Egypt facility ran at
full rates through the fourth quarter of 2019 subsequent to the
plant's restart in August.
- Medicine Hat produced 151,000
tonnes during the fourth quarter of 2019 compared to 149,000 tonnes
during the third quarter of 2019.
CONFERENCE CALL
A conference call is scheduled for January 30,
2020 at 11:00 am ET (8:00 am PT) to review these fourth 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
February 14, 2020 at (905) 694-9451, or toll free at (800)
408-3053. The passcode for the playback version is 9165317#.
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 2019 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 2019
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 15 of the Company's MD&A
for the period ended December 31, 2019 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 CampbellManager, Investor RelationsMethanex
Corporation604-661-2600
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