Methanex Reports Record Fourth Quarter 2021 Results
26 Janvier 2022 - 11:05PM
For the fourth quarter of 2021, Methanex (TSX:MX) (NASDAQ:MEOH)
reported net income attributable to Methanex shareholders of $201
million ($2.51 net income per common share on a diluted basis)
compared to net income of $71 million ($0.93 net income per common
share on a diluted basis) in the third quarter of 2021. The
increase in net income is primarily due to the higher average
realized price and higher sales of Methanex-produced methanol.
Adjusted EBITDA for the fourth quarter of 2021 was $340 million,
and Adjusted net income was $185 million ($2.43 Adjusted net income
per common share). This compares with Adjusted EBITDA of $264
million and Adjusted net income of $99 million ($1.29 Adjusted net
income per common share) for the third quarter of 2021.
In the fourth quarter, strong market conditions
supported high methanol prices while cost pressures from higher
natural gas and coal prices led to restrictions in methanol
industry production. We increased our average realized price to
$445 per tonne in the fourth quarter, a 14% or $55 per tonne
increase compared to $390 per tonne in the third quarter.
For the year ended December 31, 2021, Methanex
reported significantly higher net income attributable to Methanex
shareholders of $482 million ($6.13 net income per common shares on
a diluted basis), Adjusted EBITDA of $1,108 million and an Adjusted
net income of $460 million ($6.03 Adjusted net income per common
share). This compares with a net loss attributable to Methanex
shareholders of $157 million ($2.06 net loss per common share on a
diluted basis), Adjusted EBITDA of $346 million and an Adjusted net
loss of $123 million ($1.62 Adjusted net loss per common share) for
the year ended December 31, 2020.
We ended the quarter with $932 million in cash
and returned $68 million to shareholders through our regular
dividend and share purchase program. We repurchased 1,435,193
common shares, of the approved 3,810,464, for approximately $63
million since the start of the normal course issuer bid on
September 16, 2021.
John Floren, President & CEO of Methanex,
said, “I am extremely proud of the record financial results we
delivered in 2021 amid the continuing impact of COVID-19. In 2021,
we took actions to strengthen our asset portfolio by restarting the
construction of G3, restarting Chile IV and completing the G2
debottlenecking project. In the fourth quarter, the strong
fundamentals of the methanol industry, coupled with our high levels
of production and strong and consistent execution of our strategy
enabled us to generate strong free cash flow and deliver one of the
strongest operational and financial performances in our history."
Mr. Floren continued, "Our capital allocation priorities remain the
same. We are well positioned to maintain our business, pursue
attractive growth opportunities and continue our long track record
of returning excess cash to shareholders through a sustainable
dividend and share buybacks."
FURTHER INFORMATIONThe
information set forth in this news release summarizes Methanex's
key financial and operational data for the fourth quarter of 2021.
It is not a complete source of information for readers and is not
in any way a substitute for reading the fourth quarter 2021
Management’s Discussion and Analysis ("MD&A") dated
January 26, 2022 and the unaudited condensed consolidated
interim financial statements for the period ended December 31,
2021, both of which are available from the Investor Relations
section of our website at www.methanex.com. The MD&A and the
unaudited condensed consolidated interim financial statements for
the period ended December 31, 2021 are also available on the
Canadian Securities Administrators' SEDAR website at
www.sedar.com and on the United States Securities and Exchange
Commission's EDGAR website at www.sec.gov.
FINANCIAL AND OPERATIONAL
DATA
|
Three Months Ended |
|
Years Ended |
($ millions except per share amounts and where noted) |
Dec 312021 |
|
Sep 302021 |
|
Dec 312020 |
|
|
Dec 312021 |
|
Dec 312020 |
|
Production (thousands of tonnes) (attributable to Methanex
shareholders) 1 |
1,933 |
|
1,480 |
|
1,607 |
|
|
6,514 |
|
6,614 |
|
Sales volume (thousands of
tonnes) |
|
|
|
|
|
|
|
|
|
Methanex-produced methanol |
1,672 |
|
1,435 |
|
1,480 |
|
|
6,207 |
|
6,704 |
|
Purchased methanol |
810 |
|
1,023 |
|
1,192 |
|
|
3,750 |
|
2,994 |
|
Commission sales |
322 |
|
299 |
|
196 |
|
|
1,227 |
|
1,042 |
|
Total sales volume 1 |
2,804 |
|
2,757 |
|
2,868 |
|
|
11,184 |
|
10,740 |
|
|
|
|
|
|
|
|
|
|
|
Methanex average
non-discounted posted price ($ per tonne) 2 |
579 |
|
476 |
|
334 |
|
|
492 |
|
297 |
|
Average realized price ($ per
tonne) 3 4 |
445 |
|
390 |
|
282 |
|
|
393 |
|
247 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
1,253 |
|
1,078 |
|
811 |
|
|
4,415 |
|
2,650 |
|
Adjusted revenue 4 |
1,110 |
|
963 |
|
755 |
|
|
3,932 |
|
2,399 |
|
Net income (loss)
(attributable to Methanex shareholders) |
201 |
|
71 |
|
(27 |
) |
|
482 |
|
(157 |
) |
Adjusted net income (loss)
4 |
185 |
|
99 |
|
12 |
|
|
460 |
|
(123 |
) |
Adjusted EBITDA 4 |
340 |
|
264 |
|
136 |
|
|
1,108 |
|
346 |
|
Cash flows from operating
activities |
283 |
|
301 |
|
98 |
|
|
994 |
|
461 |
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per
common share |
2.66 |
|
0.93 |
|
(0.35 |
) |
|
6.34 |
|
(2.06 |
) |
Diluted net income (loss) per
common share |
2.51 |
|
0.93 |
|
(0.35 |
) |
|
6.13 |
|
(2.06 |
) |
Adjusted net income (loss) per
common share 4 |
2.43 |
|
1.29 |
|
0.15 |
|
|
6.03 |
|
(1.62 |
) |
|
|
|
|
|
|
|
|
|
|
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 |
75 |
|
76 |
|
76 |
|
|
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 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 revenue, 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 the MD&A,
available SEDAR at www.sedar.com, for a description of each
non-GAAP measure. |
|
|
A reconciliation from net income (loss)
attributable to Methanex shareholders to Adjusted EBITDA, Adjusted
net income (loss), Adjusted revenue, and the calculation of
Adjusted net income (loss) per common share is as follows:
|
Three Months Ended |
|
Years Ended |
($
millions) |
Dec 312021 |
|
Sep 302021 |
|
Dec 312020 |
|
|
Dec 312021 |
|
Dec 312020 |
|
Net income (loss) attributable to Methanex shareholders |
$ |
201 |
|
$ |
71 |
|
$ |
(27 |
) |
|
$ |
482 |
|
$ |
(157 |
) |
Mark-to-market impact of share-based compensation |
|
(19 |
) |
|
33 |
|
|
45 |
|
|
|
(23 |
) |
|
39 |
|
Depreciation and amortization |
|
87 |
|
|
91 |
|
|
87 |
|
|
|
363 |
|
|
357 |
|
Finance costs |
|
34 |
|
|
37 |
|
|
41 |
|
|
|
144 |
|
|
165 |
|
Finance income and other expenses |
|
4 |
|
|
(2 |
) |
|
3 |
|
|
|
(1 |
) |
|
— |
|
Income tax expense (recovery) |
|
22 |
|
|
28 |
|
|
(10 |
) |
|
|
110 |
|
|
(62 |
) |
Earnings of associate adjustment |
|
26 |
|
|
19 |
|
|
8 |
|
|
|
84 |
|
|
42 |
|
Non-controlling interests adjustment |
|
(15 |
) |
|
(13 |
) |
|
(11 |
) |
|
|
(51 |
) |
|
(38 |
) |
Adjusted EBITDA (attributable to Methanex shareholders) |
$ |
340 |
|
$ |
264 |
|
$ |
136 |
|
|
$ |
1,108 |
|
$ |
346 |
|
|
Three Months Ended |
|
Years Ended |
($ millions except number of shares and per share amounts) |
Dec 31 2021 |
|
Sep 30 2021 |
|
Dec 31 2020 |
|
|
Dec 31 2021 |
|
Dec 31 2020 |
|
Net income (loss) attributable to Methanex shareholders |
$ |
201 |
|
$ |
71 |
|
$ |
(27 |
) |
|
$ |
482 |
|
$ |
(157 |
) |
Mark-to-market impact of share-based compensation, net of tax |
|
(16 |
) |
|
28 |
|
|
39 |
|
|
|
(22 |
) |
|
34 |
|
Adjusted net income (loss) |
$ |
185 |
|
$ |
99 |
|
$ |
12 |
|
|
$ |
460 |
|
$ |
(123 |
) |
Diluted weighted average shares outstanding (millions) |
|
76 |
|
|
76 |
|
|
76 |
|
|
|
76 |
|
|
76 |
|
Adjusted net income (loss) per common share |
$ |
2.43 |
|
$ |
1.29 |
|
$ |
0.15 |
|
|
$ |
6.03 |
|
$ |
(1.62 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from revenue to Adjusted Revenue is as
follows:
|
Three Months Ended |
|
Years Ended |
($ millions) |
Dec 31 2021 |
|
Sep 30 2021 |
|
Dec 31 2020 |
|
|
Dec 31 2021 |
|
Dec 31 2020 |
|
Revenue |
$ |
1,253 |
|
$ |
1,078 |
|
$ |
811 |
|
|
$ |
4,415 |
|
$ |
2,650 |
|
Methanex share of Atlas revenue |
|
(78 |
) |
|
(61 |
) |
|
(20 |
) |
|
|
(255 |
) |
|
(115 |
) |
Non-controlling interests' share of revenue |
|
(65 |
) |
|
(54 |
) |
|
(36 |
) |
|
|
(228 |
) |
|
(136 |
) |
Adjusted Revenue |
$ |
1,110 |
|
$ |
963 |
|
$ |
755 |
|
|
$ |
3,932 |
|
$ |
2,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
We recorded net income attributable to Methanex shareholders of
$201 million in the fourth quarter of 2021 compared to net income
of $71 million in the third quarter of 2021. The increase in net
income is primarily due to the higher average realized price and
higher sales of Methanex-produced methanol. Our average discount
percentage, the percentage difference between the Methanex average
non-discounted posted price and the Methanex average realized
price, was wider in the fourth quarter of 2021 than we have
historically seen. Our Asia Pacific non-discounted posted price
encompasses the whole Asia Pacific region, including China where
there are different market fundamentals. This wider global discount
percentage was mainly due to a sustained higher price in the Asia
Pacific market ex-China compared to the China market. Starting in
2022, we have introduced a separate posted methanol price for China
to better reflect the different market fundamentals in China
compared to the other countries in the region.
- We recorded
Adjusted EBITDA of $340 million for the fourth quarter of 2021
compared to $264 million for the third quarter of 2021. We recorded
Adjusted net income of $185 million for the fourth quarter of 2021
compared to Adjusted net income of $99 million for the third
quarter of 2021. Adjusted EBITDA and Adjusted net income for the
fourth quarter of 2021 are higher than the third quarter of 2021
primarily due to the increase in our average realized methanol
price to $445 per tonne from $390 per tonne and a higher proportion
of Methanex-produced methanol sales.
- We sold 2,804,000 tonnes in the
fourth quarter of 2021 compared to 2,757,000 tonnes for the third
quarter of 2021. Sales of Methanex-produced methanol were 1,672,000
tonnes in the fourth quarter of 2021 compared to 1,435,000 tonnes
in the third quarter of 2021.
-
Production for the fourth quarter of 2021 was 1,933,000 tonnes
compared to 1,480,000 tonnes for the third quarter of 2021.
Production is higher for the fourth quarter of 2021 primarily due
to the restart of our Chile IV facility, and higher operating rates
in New Zealand and Geismar. The impact of higher production on
sales of Methanex-produced methanol will carryforward to the first
quarter, as it generally takes between 30 to 60 days for produced
methanol to make its way through the supply chain to
customers.
-
Construction on our highly advantaged Geismar 3 project is
progressing to plan and is well-positioned to be completed on-time
and on-budget by the end of 2023 or early 2024. All major equipment
is now on site which reduces the risk of supply chain issues or
inflation. Our capital cost estimate for the project is $1.25 to
$1.35 billion and we have spent $508 million to the end of 2021. We
expect approximately $750 to $850 million of remaining capital
costs before capitalized interest.
- On September 16,
2021 we commenced a normal course issuer bid to repurchase up to
3,810,464 common shares. To December 31, 2021, we repurchased
1,435,193 common shares under the bid for $63 million.
- In the fourth
quarter of 2021 we paid a $0.125 per common share quarterly
dividend to shareholders for a total of $9 million.
- At
December 31, 2021, we have a strong liquidity position
including a cash balance of $932 million and $900 million of
undrawn backup liquidity.
PRODUCTION HIGHLIGHTS
(thousands of tonnes) |
Annual OperatingCapacity1 |
2021Production |
2020Production |
Q4 2021Production |
Q3 2021Production |
Q4 2020Production |
New Zealand 2 |
2,200 |
1,348 |
1,672 |
405 |
268 |
439 |
USA (Geismar) 3 |
2,200 |
1,989 |
2,040 |
605 |
478 |
556 |
Trinidad (Methanex interest) 4 |
1,960 |
1,161 |
998 |
296 |
296 |
161 |
Chile |
1,700 |
807 |
836 |
334 |
124 |
195 |
Egypt (50% interest) |
630 |
581 |
578 |
144 |
155 |
145 |
Canada (Medicine Hat) |
640 |
628 |
490 |
149 |
159 |
111 |
|
9,330 |
6,514 |
6,614 |
1,933 |
1,480 |
1,607 |
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 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 fourth quarter and production outlook for 2022 include:
- New Zealand
produced 405,000 tonnes compared to 268,000 tonnes in the third
quarter of 2021. In New Zealand, our production levels were higher
in the fourth quarter of 2021 compared to the third quarter of 2021
as we operated both Motunui plants throughout the full period of
the fourth quarter, following the completion in late August of 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. Based on our outlook for natural gas in New
Zealand, we estimate production for 2022 to be approximately 1.5
million tonnes.
- Geismar produced
a quarterly record 605,000 tonnes in the fourth quarter of 2021
compared to 478,000 tonnes in the third quarter of 2021. Geismar
production is higher for the fourth quarter of 2021 compared to the
third quarter of 2021 as we operated the plants at high rates
throughout the fourth quarter. In the third quarter, production was
impacted by a precautionary outage of approximately two weeks
during Hurricane Ida. Geismar is now realizing the benefits of
increased capacity for a full quarter following the completion of
debottlenecking projects on both plants and recently completed
planned turnarounds. With the completion of two Geismar
debottlenecking projects, the annual operating capacity for the
Geismar facilities has increased by 10%, to 2.2 million
tonnes.
- Trinidad
produced 296,000 tonnes (Methanex interest) in the fourth quarter
of 2021 compared to 296,000 tonnes in the third quarter of 2021.
Production levels in Trinidad were comparable in the fourth quarter
of 2021 and the third quarter of 2021 as we continued to run our
Atlas plant at high operating rates. Titan remains idled
indefinitely.
- Chile produced
334,000 tonnes in the fourth quarter of 2021 compared to 124,000
tonnes in the third quarter of 2021. Production for the fourth
quarter of 2021 is higher compared to the third quarter of 2021 as
we restarted the Chile IV plant in early October when the Southern
hemisphere winter months ended and seasonal demand for natural gas
in the region decreased from its peak, allowing our gas suppliers
to deliver higher volumes. 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 2022 to
be approximately 1 million tonnes.
- Egypt produced
288,000 tonnes (Methanex interest - 144,000 tonnes) in the fourth
quarter of 2021 compared to 310,000 tonnes (Methanex interest -
155,000 tonnes) in the third quarter of 2021. Production levels in
Egypt were lower in the fourth quarter compared to the third
quarter of 2021 due to minor operating constraints.
- Medicine Hat
produced 149,000 tonnes in the fourth quarter of 2021 compared to
159,000 tonnes in the third quarter of 2021. Production for the
fourth quarter of 2021 is slightly lower compared to the third
quarter of 2021 due to weather related constraints in the fourth
quarter.
CONFERENCE CALLA conference
call is scheduled for January 27, 2022 at 11:00 am ET (8:00 am PT)
to review these fourth 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 6947035#. 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 26, 2022 at (905) 694-9451, or toll free at (800)
408-3053. The passcode for the playback version is 6095224#.
ABOUT METHANEXMethanex 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
WARNINGThis fourth 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 fourth 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 MEASURESThe Company
has used the terms Adjusted EBITDA, Adjusted net income (loss),
Adjusted net income (loss) per common share, Adjusted revenue 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 December 31, 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:
Sarah HerriottDirector, Investor RelationsMethanex
Corporation604-661-2600
Methanex (TSX:MX)
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