Methanex Reports Higher First Quarter 2024 Earnings as Methanol Prices Increase
- Net income of $53 million and Adjusted EBITDA of $160 million in Q1 2024.
- Average realized price per tonne increased to $343 from $322 in Q4 2023.
- Repair costs for Geismar 3 plant estimated at $15 million, total capital cost at $1.30 billion.
- Completed repairs at Egypt plant and renewed $300 million revolving credit facility with an additional $200 million tranche.
- Returned $12.5 million to shareholders in dividends and ended the quarter with $407 million in cash.
- None.
Insights
The rise in Methanex's average realized price from $322 to $343 per tonne demonstrates the company's ability to capitalize on methanol market dynamics, notably supply constraints in key regions. This price increase directly contributes to the improved net income of $53 million, up from $33 million in the previous quarter. It's important for investors to note that Methanex's strategy to manage operational challenges, such as the G3 plant delay, has helped maintain financial performance, evidenced by the strong Adjusted EBITDA of $160 million.
The company's liquidity, with a cash balance of $407 million and an enhanced credit facility totaling $500 million, suggests a solid financial position to navigate future challenges. However, the operating cost impact from the G3 delay—$5 million per month—needs careful monitoring, as prolonged delays could put pressure on earnings. The dividend payment of $12.5 million aligns with a shareholder-friendly approach but must be weighed against capital requirements for ongoing repairs and potential operational headwinds.
The market for methanol is currently experiencing price volatility due to seasonal diversions and outages, influencing Methanex's performance. Investors should appreciate the complexity of the methanol market and how external factors can contribute to price fluctuations that impact Methanex's results. The company's ability to maintain operations and manage its flexible supply chain despite disruptions is a positive indicator of its adaptive business model, important in an industry susceptible to geopolitical and supply chain risks.
Looking forward, the repair and restart of the G3 plant will be pivotal. The successful restart could enhance Methanex's production capacity and strengthen its market position. However, potential risks include further delays or cost overruns associated with the repair process. Investors should weigh these factors within the broader context of energy markets and global economic conditions.
Except where otherwise noted, all currency amounts are stated in United States dollars.
- Net income attributable to Methanex shareholders of
$53 million and Adjusted EBITDA of$160 million in the first quarter. Our average realized price in the first quarter was$343 per tonne compared to$322 per tonne in the fourth quarter of 2023. - Work is progressing to safely repair the Geismar 3 ("G3") plant and we believe that the plant is on track to start up in the third quarter of 2024. Repair costs are expected to be
$15 million and the total capital cost for the project is expected to remain at approximately$1.30 billion . The remaining capital cost of$70 million is fully funded with cash on hand. The operating cost impact of the delay is approximately$5 million per month and in the first quarter delay costs were approximately$25 million due to take-or-pay on utilities contracts, the organization build-up of fixed costs, and the accounting recognition of over-hedged gas costs. These operating costs are included in Adjusted EBITDA. - Successfully completed repairs at the Egypt plant and reached full operating rates in February.
- In April 2024, the existing
$300 million revolving credit facility was renewed to April 2028 and an additional$200 million tranche was added which expires in April 2026. This additional financial capacity provides increased flexibility to manage our business. - Returned
$12.5 million to shareholders through regular dividends in the first quarter and ended the first quarter with$407 million in cash.
VANCOUVER, British Columbia, April 24, 2024 (GLOBE NEWSWIRE) -- For the first quarter of 2024, Methanex (TSX:MX) (NASDAQ:MEOH) reported net income attributable to Methanex shareholders of
Our average realized price in the first quarter was
In the first quarter, we returned
Rich Sumner, President & CEO of Methanex, said, “Our global team responded well to the delay in the start-up of G3, maintaining safe operations and a flexible supply chain while we investigated the root cause of the incident. We will continue to focus on safety and ensuring the G3 plant meets our quality expectations. Our business delivered a strong operational and financial quarter in the midst of a dynamic global landscape."
FURTHER INFORMATION
The information set forth in this news release summarizes Methanex's key financial and operational data for the first quarter of 2024. It is not a complete source of information for readers and is not in any way a substitute for reading the first quarter 2024 Management’s Discussion and Analysis ("MD&A") dated April 24, 2024 and the unaudited condensed consolidated interim financial statements for the period ended March 31, 2024, both of which are available from the Investor Relations section of our website at www.methanex.com. The MD&A and the unaudited condensed consolidated interim financial statements for the period ended March 31, 2024 are also available on the Canadian Securities Administrators' SEDAR+ website at www.sedarplus.ca and on the United States Securities and Exchange Commission's EDGAR website at www.sec.gov.
FINANCIAL AND OPERATIONAL DATA
| Three Months Ended | |||
| ($ millions except per share amounts and where noted) | Mar 31 2024 | Dec 31 2023 | Mar 31 2023 |
| Production (thousands of tonnes) (attributable to Methanex shareholders)1 | 1,721 | 1,779 | 1,660 |
| Sales volume (thousands of tonnes) | |||
| Methanex-produced methanol | 1,681 | 1,712 | 1,649 |
| Purchased methanol | 807 | 890 | 848 |
| Commission sales | 182 | 260 | 308 |
| Total sales volume1 | 2,670 | 2,862 | 2,805 |
| Methanex average non-discounted posted price ($ per tonne)2 | 471 | 421 | 471 |
| Average realized price ($ per tonne)3 | 343 | 322 | 371 |
| Revenue | 916 | 922 | 1,038 |
| Net income (attributable to Methanex shareholders) | 53 | 33 | 60 |
| Adjusted net income4 | 44 | 35 | 76 |
| Adjusted EBITDA4 | 160 | 148 | 209 |
| Cash flows from operating activities | 91 | 195 | 162 |
| Basic net income per common share | 0.78 | 0.50 | 0.87 |
| Diluted net income per common share | 0.77 | 0.50 | 0.87 |
| Adjusted net income per common share4 | 0.65 | 0.52 | 1.11 |
| Common share information (millions of shares) | |||
| Weighted average number of common shares | 67 | 67 | 69 |
| Diluted weighted average number of common shares | 68 | 68 | 69 |
| Number of common shares outstanding, end of period | 67 | 67 | 68 |
| 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 | |||
| 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. ARP is calculated as revenue divided by the total sales volume. 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, and Adjusted EBITDA 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 theAdditional Information -Non-GAAP Measuressection on page 13 of our first quarter MD&A dated April 24, 2024 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 31 2024 | Dec 31 2023 | Mar 31 2023 | ||||||
| Net income attributable to Methanex shareholders | $ | 53 | $ | 33 | $ | 60 | |||
| Mark-to-market impact of share-based compensation | (10 | ) | 3 | 20 | |||||
| Depreciation and amortization | 95 | 100 | 98 | ||||||
| Finance costs | 28 | 30 | 31 | ||||||
| Finance income and other | (3 | ) | (11 | ) | (11 | ) | |||
| Income tax expense (recovery) | 6 | (14 | ) | 14 | |||||
| Earnings of associate adjustment | 9 | 15 | 19 | ||||||
| Non-controlling interests adjustment | (18 | ) | (8 | ) | (22 | ) | |||
| Adjusted EBITDA | $ | 160 | $ | 148 | $ | 209 | |||
| Three Months Ended | |||||||||
| ($ millions except number of shares and per share amounts) | Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | ||||||
| Net income attributable to Methanex shareholders | $ | 53 | $ | 33 | $ | 60 | |||
| Mark-to-market impact of share-based compensation, net of tax | (9 | ) | 3 | 17 | |||||
| Impact of Egypt gas contract revaluation, net of tax | — | (1 | ) | (1 | ) | ||||
| Adjusted net income | $ | 44 | $ | 35 | $ | 76 | |||
| Diluted weighted average shares outstanding (millions) | 68 | 68 | 69 | ||||||
| Adjusted net income per common share | $ | 0.65 | $ | 0.52 | $ | 1.11 | |||
- We recorded net income attributable to Methanex shareholders of
$53 million in the first quarter of 2024 compared to net income of$33 million in the fourth quarter of 2023. Net income in the first quarter of 2024 was higher compared to the prior quarter primarily due to a higher average realized price and the positive impact of the mark-to-market portion of share-based compensation due to changes in Methanex's share price, offset by the one-time impact of the ineffective portion of natural gas hedges at our Geismar site recognized during the first quarter of 2024. - We recorded Adjusted EBITDA of
$160 million for the first quarter of 2024 compared to$148 million for the fourth quarter of 2023. We recorded Adjusted net income of$44 million for the first quarter of 2024 compared to Adjusted net income of$35 million for the fourth quarter of 2023. Adjusted EBITDA was higher in the first quarter of 2024 primarily due to a higher average realized price, partially offset by the one-time impact of the ineffective portion of natural gas hedges for our Geismar site. - We sold 2,670,000 tonnes in the first quarter of 2024 compared to 2,862,000 tonnes in the fourth quarter of 2023. Sales of Methanex-produced methanol were 1,681,000 tonnes in the first quarter of 2024 compared to 1,712,000 tonnes in the fourth quarter of 2023. The restart of Egypt in February led to a slight build in produced inventory in the first quarter.
- Production for the first quarter of 2024 was 1,721,000 tonnes compared to 1,779,000 tonnes for the fourth quarter of 2023. Production was slightly lower in the first quarter of 2024 compared to the fourth quarter of 2023 mainly due to lower production in New Zealand which was partially offset by higher production in Egypt.
- Work is progressing to safely repair the Geismar 3 ("G3") plant and we believe that the plant is on track to start up in the third quarter of 2024. Repair costs are expected to be
$15 million and the total capital cost for the project is expected to remain at approximately$1.30 billion . The remaining capital cost is fully funded with cash on hand. The operating cost impact of the delay is approximately$5 million per month and in the first quarter delay costs were approximately$25 million due to take-or-pay on utilities contracts, the organization build-up of fixed costs, and the accounting recognition of over-hedged gas costs. These operating costs are included in Adjusted EBITDA. - In the first quarter of 2024 we paid a quarterly dividend of
$0.18 5 per common share for a total of$12.5 million . - At March 31, 2024, we had a strong liquidity position including a cash balance of
$407 million , or approximately$378 million excluding non-controlling interests and including our share of cash in the Atlas joint venture. With the renewal of our revolving credit facility, along with the addition of the$200 million tranche in April, we have a total of$500 million of facilities providing financial flexibility.
PRODUCTION HIGHLIGHTS
| Q1 2024 | Q4 2023 | Q1 2023 | ||
| (thousands of tonnes) | Operating Capacity1 | Production | Production | Production |
| USA (Geismar) | 550 | 571 | 587 | 449 |
| New Zealand2 | 430 | 277 | 344 | 403 |
| Trinidad (Methanex interest)3 | 490 | 258 | 283 | 256 |
| Chile | 425 | 391 | 403 | 249 |
| Egypt ( | 158 | 83 | 20 | 161 |
| Canada (Medicine Hat) | 150 | 141 | 142 | 142 |
| 2,203 | 1,721 | 1,779 | 1,660 | |
| 1 The operating capacity of our production facilities may be higher or lower 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 availability, feedstock composition, the age of the facility's catalyst, turnarounds and access to CO2from external suppliers for certain facilities. 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. | ||||
| 3 The operating capacity of Trinidad is made up of the Titan ( | ||||
Key production and operational highlights during the first quarter include:
United States
Geismar produced 571,000 tonnes in the first quarter of 2024 compared to 587,000 tonnes in the fourth quarter of 2023.
New Zealand
New Zealand produced 277,000 tonnes in the first quarter of 2024 compared to 344,000 tonnes in the fourth quarter of 2023. Production in the first quarter was lower compared to the fourth quarter because of lower gas deliveries due to planned natural gas infrastructure maintenance at our suppliers' gas fields. Our production guidance for 2024 is between 1.0 - 1.1 million tonnes. 2024 natural gas supply is expected to be impacted by a combination of our suppliers' planned natural gas infrastructure maintenance outages as well as lower than expected output from existing wells. While upstream investment has been made by our gas suppliers in New Zealand over the past two years, recent gas production results have been lower than expected and we are closely monitoring production results in 2024.
Trinidad
Atlas produced 258,000 tonnes (Methanex interest) in the first quarter of 2024 compared to 283,000 tonnes in the fourth quarter of 2023. Production was lower in the first quarter due to an unplanned outage. In October 2023, Methanex signed a two-year natural gas supply agreement with the National Gas Company of Trinidad and Tobago (NGC) for its currently idled, wholly owned, Titan methanol plant (875,000 tonnes per year capacity) to restart operations in September 2024. Simultaneously, the Atlas plant (Methanex interest
Chile
Chile produced 391,000 tonnes in the first quarter of 2024 compared to 403,000 tonnes in the fourth quarter of 2023. Production was similar in the first quarter compared to the fourth quarter with full gas deliveries from Argentina, although the resulting production was at lower than capacity due to catalyst constraints. We estimate production for 2024 will be between 1.1 - 1.2 million tonnes which is underpinned by year-round natural gas supply from Chile for about 30 –
Egypt
Egypt produced 166,000 tonnes (Methanex interest - 83,000 tonnes) in the first quarter of 2024 compared to 40,000 tonnes (Methanex interest - 20,000 tonnes) in the fourth quarter of 2023. The plant restarted and reached full operating rates in February after an unplanned outage in mid-October caused by a mechanical failure in the synthesis gas compressor.
Canada
Medicine Hat produced 141,000 tonnes in the first quarter of 2024 compared to 142,000 tonnes in the fourth quarter of 2023.
2024 Production Outlook
We are updating our expected production guidance for 2024 to approximately 7.0 million tonnes (Methanex interest). Our 2024 production guidance has been lowered primarily because of the Geismar 3 start-up delay. This expected production guidance is based on the mid-point of Chile and New Zealand production guidance, G3 starting up in the third quarter and operating at full rates in the fourth quarter, Egypt restart in the first half of February, and all other plants operating at full rates. Actual production may vary by quarter based on timing of turnarounds, gas availability, unplanned outages and unanticipated events.
CONFERENCE CALL
A conference call is scheduled for April 25, 2024 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 (646) 307-1963, or toll free at (800) 715-9871. The conference ID for the call is #9072911. 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 2024 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 2024 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.sedarplus.ca 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, and Adjusted net income per common share 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, the impact of the Egypt gas contract revaluation 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, 2024 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 Herriott
Director, Investor Relations
Methanex Corporation
604-661-2600
FAQ
What were Methanex's net income and Adjusted EBITDA in the first quarter of 2024?
How much did the average realized price per tonne increase to in the first quarter of 2024?
What are the repair costs estimated for the Geismar 3 plant?
How much did Methanex return to shareholders in dividends in the first quarter of 2024?
How much cash did Methanex end the first quarter of 2024 with?
