For the fourth quarter of 2023, Methanex (TSX:MX) (NASDAQ:MEOH)
reported net income attributable to Methanex shareholders of $33
million ($0.50 net income per common share on a diluted basis)
compared to net income of $24 million ($0.36 net income per common
share on a diluted basis) in the third quarter of 2023. Net income
in the fourth quarter of 2023 was higher compared to the prior
quarter primarily due to a higher average realized price, higher
sales of Methanex-produced methanol and lower mark-to-market impact
of share-based compensation due to changes in Methanex's share
price, offset by lower income from gas contract settlement
recognized in the third quarter of 2023. Adjusted EBITDA for the
fourth quarter of 2023 was $148 million and Adjusted net income was
$35 million ($0.52 Adjusted net income per common share). This
compares with Adjusted EBITDA of $105 million and Adjusted net
income of $1 million ($0.02 Adjusted net income per common share)
for the third quarter of 2023.
Our average realized price in the fourth quarter
was $322 per tonne compared to $303 per tonne in the third quarter
of 2023. Through the fourth quarter, market conditions
strengthened, with increased demand primarily in China outpacing an
increase in supply. On the supply side, production increased from
coal-based producers in China which was offset by planned and
unplanned outages in the US and Asia as well as lower production
from natural gas restrictions in Iran and China. This led to a
drawdown on inventories and increasing methanol prices through the
quarter.
For the year ended December 31, 2023,
Methanex reported net income attributable to Methanex shareholders
of $174 million ($2.57 net income per common share on a diluted
basis), Adjusted EBITDA of $622 million and an Adjusted net income
of $153 million ($2.25 Adjusted net income per common share). This
compares with a net income attributable to Methanex shareholders of
$354 million ($4.86 net income per common share on a diluted
basis), Adjusted EBITDA of $932 million and an Adjusted net income
of $343 million ($4.79 Adjusted net income per common share) for
the year ended December 31, 2022.
In 2023, we returned $136 million to
shareholders through the regular dividend and share repurchases. We
ended the year with $458 million in cash, or approximately $451
million in cash excluding non-controlling interests and including
our share of cash in the Atlas joint venture. We also have an
undrawn $300 million revolving credit facility that provides
additional financial flexibility.
Rich Sumner, President & CEO of Methanex,
said, “I am proud of our G3 team that delivered a high quality
plant with outstanding safety performance. G3 significantly
enhances our asset portfolio and we expect it to generate strong
shareholder returns. We remain focused on reliably operating our
assets so we can deliver shareholder value over a variety of
methanol prices."
FURTHER INFORMATION
The information set forth in this news release
summarizes Methanex's key financial and operational data for the
fourth quarter of 2023. It is not a complete source of information
for readers and is not in any way a substitute for reading the
fourth quarter 2023 Management’s Discussion and Analysis
("MD&A") dated January 31, 2024 and the unaudited
condensed consolidated interim financial statements for the period
ended December 31, 2023, both of which are available from the
Investor Relations section of our website at www.methanex.com. The
MD&A and the unaudited condensed consolidated interim financial
statements for the period ended December 31, 2023 are also
available on the Canadian Securities Administrators' SEDAR+ website
at www.sedarplus.ca and on the United States Securities and
Exchange Commission's EDGAR website at www.sec.gov.
FINANCIAL AND OPERATIONAL
DATA
| |
Three Months Ended |
|
Years Ended |
|
($ millions except per share amounts and where noted) |
Dec 312023 |
|
|
|
Sep 302023 |
|
|
|
Dec 312022 |
|
|
|
Dec 312023 |
|
|
|
Dec 312022 |
|
|
Production (thousands of tonnes) (attributable to Methanex
shareholders) 1 |
1,779 |
|
|
|
1,545 |
|
|
|
1,526 |
|
|
|
6,642 |
|
|
|
6,118 |
|
| Sales volume (thousands of
tonnes) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Methanex-produced methanol |
1,712 |
|
|
|
1,473 |
|
|
|
1,360 |
|
|
|
6,455 |
|
|
|
6,141 |
|
|
Purchased methanol |
890 |
|
|
|
905 |
|
|
|
1,095 |
|
|
|
3,527 |
|
|
|
3,688 |
|
|
Commission sales |
260 |
|
|
|
342 |
|
|
|
192 |
|
|
|
1,187 |
|
|
|
945 |
|
|
Total sales volume 1 |
2,862 |
|
|
|
2,720 |
|
|
|
2,647 |
|
|
|
11,169 |
|
|
|
10,774 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Methanex average
non-discounted posted price ($ per tonne) 2 |
421 |
|
|
|
395 |
|
|
|
469 |
|
|
|
434 |
|
|
|
503 |
|
| Average realized price ($ per
tonne) 3 |
322 |
|
|
|
303 |
|
|
|
373 |
|
|
|
333 |
|
|
|
397 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
922 |
|
|
|
823 |
|
|
|
986 |
|
|
|
3,723 |
|
|
|
4,311 |
|
| Net income (attributable to
Methanex shareholders) |
33 |
|
|
|
24 |
|
|
|
41 |
|
|
|
174 |
|
|
|
354 |
|
| Adjusted net income 4 |
35 |
|
|
|
1 |
|
|
|
51 |
|
|
|
153 |
|
|
|
343 |
|
| Adjusted EBITDA 4 |
148 |
|
|
|
105 |
|
|
|
160 |
|
|
|
622 |
|
|
|
932 |
|
| Cash flows from operating
activities |
195 |
|
|
|
106 |
|
|
|
227 |
|
|
|
660 |
|
|
|
987 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic net income per common
share |
0.50 |
|
|
|
0.36 |
|
|
|
0.59 |
|
|
|
2.57 |
|
|
|
4.95 |
|
| Diluted net income per common
share |
0.50 |
|
|
|
0.36 |
|
|
|
0.59 |
|
|
|
2.57 |
|
|
|
4.86 |
|
| Adjusted net income per common
share 4 |
0.52 |
|
|
|
0.02 |
|
|
|
0.73 |
|
|
|
2.25 |
|
|
|
4.79 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common share information
(millions of shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares |
67 |
|
|
|
67 |
|
|
|
70 |
|
|
|
68 |
|
|
|
71 |
|
|
Diluted weighted average number of common shares |
68 |
|
|
|
67 |
|
|
|
70 |
|
|
|
68 |
|
|
|
72 |
|
|
Number of common shares outstanding, end of period |
67 |
|
|
|
67 |
|
|
|
69 |
|
|
|
67 |
|
|
|
69 |
|
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. 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 the Additional Information - Non-GAAP Measures
section on page 14 of our fourth quarter MD&A dated
January 31, 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 |
|
Years Ended |
| ($
millions) |
|
Dec 312023 |
|
|
|
Sep 302023 |
|
|
|
Dec 312022 |
|
|
|
Dec 312023 |
|
|
|
Dec 312022 |
|
|
Net income attributable to Methanex shareholders |
$ |
33 |
|
|
$ |
24 |
|
|
$ |
41 |
|
|
$ |
174 |
|
|
$ |
354 |
|
|
Mark-to-market impact of share-based compensation |
|
3 |
|
|
|
8 |
|
|
|
12 |
|
|
|
16 |
|
|
|
(7 |
) |
|
Gas contract settlement, net of tax |
|
— |
|
|
|
(31 |
) |
|
|
— |
|
|
|
(31 |
) |
|
|
— |
|
|
Depreciation and amortization |
|
100 |
|
|
|
98 |
|
|
|
86 |
|
|
|
392 |
|
|
|
372 |
|
|
Finance costs |
|
30 |
|
|
|
26 |
|
|
|
32 |
|
|
|
117 |
|
|
|
131 |
|
|
Finance income and other |
|
(11 |
) |
|
|
(2 |
) |
|
|
(18 |
) |
|
|
(40 |
) |
|
|
(25 |
) |
|
Income tax expense (recovery) |
|
(14 |
) |
|
|
(18 |
) |
|
|
7 |
|
|
|
1 |
|
|
|
120 |
|
|
Earnings of associate adjustment |
|
15 |
|
|
|
23 |
|
|
|
18 |
|
|
|
67 |
|
|
|
74 |
|
|
Non-controlling interests adjustment |
|
(8 |
) |
|
|
(23 |
) |
|
|
(18 |
) |
|
|
(74 |
) |
|
|
(87 |
) |
|
Adjusted EBITDA |
$ |
148 |
|
|
$ |
105 |
|
|
$ |
160 |
|
|
$ |
622 |
|
|
$ |
932 |
|
| |
Three Months Ended |
|
Years Ended |
|
($ millions except number of shares and per share amounts) |
|
Dec 312023 |
|
|
|
Sep 302023 |
|
|
|
Dec 312022 |
|
|
|
Dec 312023 |
|
|
|
Dec 312022 |
|
|
Net income attributable to Methanex shareholders |
$ |
33 |
|
|
$ |
24 |
|
|
$ |
41 |
|
|
$ |
174 |
|
|
$ |
354 |
|
|
Mark-to-market impact of share-based compensation, net of tax |
|
3 |
|
|
|
6 |
|
|
|
11 |
|
|
|
13 |
|
|
|
(6 |
) |
|
Gas contract settlement, net of tax |
|
— |
|
|
|
(31 |
) |
|
|
— |
|
|
|
(31 |
) |
|
|
— |
|
|
Impact of Egypt gas contract revaluation, net of tax |
|
(1 |
) |
|
|
2 |
|
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(5 |
) |
|
Adjusted net income |
$ |
35 |
|
|
$ |
1 |
|
|
$ |
51 |
|
|
$ |
153 |
|
|
$ |
343 |
|
| Diluted weighted average
shares outstanding (millions) |
|
68 |
|
|
|
67 |
|
|
|
70 |
|
|
|
68 |
|
|
|
72 |
|
|
Adjusted net income per common share |
$ |
0.52 |
|
|
$ |
0.02 |
|
|
$ |
0.73 |
|
|
$ |
2.25 |
|
|
$ |
4.79 |
|
- We recorded net
income attributable to Methanex shareholders of $33 million in the
fourth quarter of 2023 compared to net income of $24 million in the
third quarter of 2023. Net income in the fourth quarter of 2023 was
higher compared to the prior quarter primarily due to a higher
average realized price, higher sales of Methanex-produced methanol
and lower mark-to-market impact of share-based compensation due to
changes in Methanex's share price, offset by lower income from the
gas contract settlement recognized in the third quarter of 2023.
Income from gas contract settlement was excluded from Adjusted
EBITDA and Adjusted net income in the third quarter of 2023.
- We recorded
Adjusted EBITDA of $148 million for the fourth quarter of 2023
compared to $105 million for the third quarter of 2023. We recorded
Adjusted net income of $35 million for the fourth quarter of 2023
compared to Adjusted net income of $1 million for the third quarter
of 2023. Adjusted EBITDA was higher in the fourth quarter of 2023
primarily due to a higher average realized price and higher sales
of Methanex-produced methanol.
- We sold
2,862,000 tonnes in the fourth quarter of 2023 compared to
2,720,000 tonnes for the third quarter of 2023. Sales of
Methanex-produced methanol were 1,712,000 tonnes in the fourth
quarter of 2023 compared to 1,473,000 tonnes in the third quarter
of 2023.
- Production for
the fourth quarter of 2023 was 1,779,000 tonnes compared to
1,545,000 tonnes for the third quarter of 2023. Fourth quarter
production was higher compared to the third quarter due to higher
production in Chile, New Zealand, Geismar and Medicine Hat which
was partially offset by lower production in Egypt.
- The Geismar 3
plant is in the process of starting up, with total capital costs
expected to come within budget of $1.25 - 1.3 billion. The
remaining cash expenditure of approximately $60 to $110 million,
including approximately $20 million of spending accrued in accounts
payable, is fully funded with cash on hand. Geismar 3 has one of
the lowest CO2 emissions intensity profiles in the industry and
significantly enhances our cash generation capability. We expect
the plant to ramp up to full rates over the month of February.
- In the fourth
quarter of 2023 we paid a quarterly dividend of $0.185 per common
share for a total of $12.5 million.
- At
December 31, 2023, we had a strong liquidity position
including a cash balance of $458 million, or approximately $451
million excluding non-controlling interests and including our share
of cash in the Atlas joint venture. We also have access to an
undrawn $300 million revolving credit facility providing financial
flexibility.
PRODUCTION HIGHLIGHTS
|
(thousands of tonnes) |
Annual Operating Capacity1 |
2023Production |
2022Production |
Q4 2023 Production |
Q3 2023 Production |
Q4 2022 Production |
|
USA (Geismar) |
2,200 |
2,142 |
2,041 |
587 |
574 |
437 |
| New Zealand 2 |
2,200 |
1,381 |
1,230 |
344 |
226 |
395 |
| Trinidad (Methanex interest)
3 |
1,960 |
1,074 |
981 |
283 |
287 |
225 |
| Chile |
1,700 |
993 |
888 |
403 |
168 |
226 |
| Egypt (50% interest) |
630 |
504 |
385 |
20 |
160 |
96 |
| Canada
(Medicine Hat) |
640 |
548 |
593 |
142 |
130 |
147 |
|
|
9,330 |
6,642 |
6,118 |
1,779 |
1,545 |
1,526 |
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 CO2 from 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 and the Waitara Valley facility.
The Waitara Valley plant is idled indefinitely due to natural gas
constraints. 3 The operating capacity of Trinidad
is made up of the Titan (100% interest) and Atlas (63.1% interest)
facilities. Refer to the Trinidad section below.
Key production and operational highlights during the fourth
quarter include:
United States
Geismar produced 587,000 tonnes in the fourth
quarter compared to 574,000 tonnes in the third quarter of
2023.
New Zealand
New Zealand produced 344,000 tonnes in the
fourth quarter of 2023 compared to 226,000 tonnes in the third
quarter of 2023. Production in the fourth quarter was higher
compared to the third quarter due to the restart of Motunui 2 after
the scheduled turnaround. Waitara Valley remains idled
indefinitely. We estimate production for 2024 to be 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 originally expected
which has contributed to the revised forecast for lower production
in 2024.
Trinidad
Atlas produced 283,000 tonnes (Methanex
interest) in the fourth quarter of 2023 compared to 287,000 tonnes
in the third quarter of 2023. In October, 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 63.1% or 1,085,000 tonnes per year capacity)
will be idled in September 2024, when its legacy 20-year natural
gas supply agreement expires.
Chile
Chile produced 403,000 tonnes in the fourth
quarter of 2023 compared to 168,000 tonnes in the third quarter of
2023. Production was higher in the fourth quarter compared to the
third quarter as both plants ran at full rates with full gas
deliveries from Argentina. Both plants are expected to run at full
rates from the end of September 2023 through April 2024, the
Southern hemisphere summer months. 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 – 35% of our
requirements with the remaining 65 – 70% from Argentina during the
non-winter period allowing us to operate both plants at full rates.
Natural gas development and related infrastructure investments in
Argentina continue to progress and we are working with our natural
gas suppliers on extending the period of full gas availability to
our plants.
Egypt
Egypt produced 40,000 tonnes (Methanex interest
- 20,000 tonnes) in the fourth quarter of 2023 compared to 320,000
tonnes (Methanex interest - 160,000 tonnes) in the third quarter of
2023. Production was lower in Egypt due an unplanned outage in
mid-October caused by a mechanical failure in the synthesis gas
compressor. The unit was removed from service and repaired on an
expedited schedule at the manufacturer overseas. The repairs were
completed and the unit has now arrived back on site and we expect
to be able to start up the plant in the first half of February.
Canada
Medicine Hat produced 142,000 tonnes in the
fourth quarter of 2023 compared to 130,000 tonnes in the third
quarter of 2023.
2024 Production Outlook
We expect production for 2024 to be higher than
2023 with the Geismar 3 start-up and to be approximately 8.1
million tonnes (Methanex interest). 2024 production guidance is
based on the mid-point of Chile and New Zealand production
guidance, G3 ramp up through February, 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 February 1,
2024 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 (646) 960-0479, or toll
free at (888) 510-2296. The conference ID for the call is #7014770.
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 fourth quarter 2023 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 2023
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 14 of the Company's MD&A for the
period ended December 31, 2023 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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