Mr. John Floren reports
METHANEX REPORTS THIRD QUARTER 2016 RESULTS
For the third quarter of 2016, Methanex Corp. had a net loss attributable to Methanex shareholders of $11-million (12-cent net loss per common share on a diluted basis) compared with a net loss of $3-million (eight-cent net loss per common share on a diluted basis) in the second quarter of 2016. Adjusted EBITDA for the third quarter of 2016 was $74 million and Adjusted net loss was $1 million ($0.01 Adjusted net loss per common share). This compares with Adjusted EBITDA of $38 million and Adjusted net loss of $31 million ($0.34 Adjusted net loss per common share) for the second quarter of 2016.
John Floren, President and CEO of Methanex commented, "Our third quarter Adjusted EBITDA reflects the impact of higher average realized methanol pricing along with higher sales of produced methanol compared to the second quarter. We achieved another company record this quarter with a 5% increase in sales to 2,476,000 tonnes. Sales of produced methanol was also a quarterly record of 1,860,000 tonnes. We continue to experience healthy global demand, and we estimate year-over-year demand growth at 10% as at September 30, 2016. A tighter supply/demand balance, combined with rising China thermal coal prices which pressured the cost of China production, contributed to improving methanol prices."
John Floren continued, "Our subsidiary Waterfront Shipping took delivery of two additional vessels this quarter capable of running on methanol, and we expect the final vessel of seven to be delivered in November 2016. We expect these innovative new dual-fuel vessels to play an important role in paving the way for methanol as a clean burning marine fuel."
"We continue to make significant progress in improving our operating capacity in Chile. This quarter we reached an agreement with Empresa Nacional del Petroleo for additional gas supply through May 2018, and also amended and extended our gas supply agreement with GeoPark Fell SpA. Our combined gas supply commitments from these and other sources are expected to allow our 0.9 million tonne Chile I facility to achieve an annual operating rate of approximately 60% of capacity, on average, through May 2018. We continue to be optimistic that our underutilized 1.7 million tonne Chile facilities represent a low capital cost growth opportunity for Methanex as further progress is made in lowering the cost of developing reserves in the area."
Mr. Floren concluded, "During the quarter, we paid a $25 million dividend to shareholders. With $234 million of cash on hand, an undrawn credit facility and a robust balance sheet, we continue to be well positioned to meet our financial and capital commitments. Our assets are in excellent shape and we are poised to generate strong future cash flows as methanol prices improve."
FURTHER INFORMATION
The information set forth in this news release summarizes Methanex's key financial and operational data for the third quarter of 2016. It is not a complete source of information for readers and is not in any way a substitute for reading the third quarter 2016 Management's Discussion and Analysis ("MD&A") dated October 26, 2016 and the condensed consolidated interim financial statements for the period ended September 30, 2016, both of which are available from the Investor Relations section of our website at www.methanex.com. The MD&A and the condensed consolidated interim financial statements for the period ended September 30, 2016 are also available on the Canadian Securities Administrators' SEDAR website at www.sedar.com and on the United States Securities and Exchange Commission's EDGAR website at www.sec.gov.
FINANCIAL AND OPERATIONAL DATA
Three Months Ended Nine Months Ended
---------------------------------------------
($ millions except per share Sep 30 Jun 30 Sep 30 Sep 30 Sep 30
amounts and where noted) 2016 2016 2015 2016 2015
----------------------------------------------------------------------------
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Production (thousands of
tonnes) (attributable to
Methanex shareholders) 1,749 1,770 1,259 5,158 3,804
Sales volume (thousands of
tonnes)
Methanex-produced methanol
(attributable to Methanex
shareholders) 1,860 1,689 1,238 5,078 3,678
Purchased methanol 411 533 679 1,366 2,144
Commission sales 205 140 169 513 463
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Total sales volume (1) 2,476 2,362 2,086 6,957 6,285
Methanex average non-discounted
posted price ($ per tonne) (2) 272 260 384 268 390
Average realized price ($ per
tonne) (3) 236 223 323 230 337
Revenue 510 468 527 1,413 1,742
Adjusted revenue 537 496 619 1,483 1,940
Adjusted EBITDA 74 38 95 148 321
Cash flows from operating
activities 74 34 134 178 253
Adjusted net income (loss) (1) (31) 23 (56) 95
Net income (loss) (attributable
to Methanex shareholders) (11) (3) 78 (37) 191
Adjusted net income (loss) per
common share (0.01) (0.34) 0.26 (0.63) 1.04
Basic net income (loss) per
common share (0.12) (0.03) 0.87 (0.42) 2.10
Diluted net income (loss) per
common share (0.12) (0.08) 0.54 (0.42) 1.90
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(1) Total sales volume includes any volume produced by Chile using natural
gas supplied from Argentina under a tolling arrangement ("Tolling Volume").
Tolling Volume was nil for the three and nine months ended September 30,
2016 compared to 1,000 tonnes and 69,000 tonnes for the same periods in
2015. Commission sales represent volume marketed on a commission basis
related to the 36.9% of the Atlas methanol facility and 50% of the Egypt
methanol 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 http://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 (attributable to Methanex
shareholders) and purchased methanol, but excluding Tolling Volume.
-
-- We recorded a net loss attributable to Methanex shareholders of $11
million during the third quarter of 2016, compared to a net loss of $3
million in the second quarter of 2016. The change is primarily due to an
increase in our average realized price during the third quarter which
was offset by the impact of a settlement received in the second quarter
and a mark-to-market loss on share-based compensation in the third
quarter (compared to a mark-to-market gain in the second quarter).
-
-- We recorded Adjusted EBITDA of $74 million for the third quarter of 2016
compared with $38 million for the second quarter of 2016. Adjusted net
loss was $1 million for the third quarter of 2016, compared to adjusted
net loss of $31 million for the second quarter of 2016. The improvement
in Adjusted EBITDA and Adjusted net loss was primarily due to an
increase in our average realized price and increased sales of Methanex-
produced methanol. Our average realized price increased to $236 per
tonne for the third quarter of 2016 from $223 per tonne for the second
quarter of 2016.
-
-- Sales of Methanex-produced methanol were a record 1,860,000 tonnes in
the third quarter of 2016 compared with 1,689,000 in the second quarter
of 2016. Sales of Methanex-produced methanol were higher than production
in the third quarter, which resulted in a draw on our produced product
inventory by over 100,000 tonnes. Please refer to the Production
Highlights section of this document for production detail.
-
-- Cash flows from operating activities in the third quarter of 2016 were
$74 million compared with $34 million for the second quarter of 2016.
-
-- Our planned capital maintenance expenditure program directed towards
maintenance, turnarounds and catalyst changes for existing operations,
including our 63.1% share of Atlas, is currently estimated to be
approximately $100 million from October 1, 2016 to the end of 2017.
-
-- During the third quarter of 2016 we paid a $0.275 per common share
dividend to shareholders for a total of $25 million.
PRODUCTION HIGHLIGHTS
Q3 2016 Q2 2016
Operating
(thousands of tonnes) Capacity(1) Production Production
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New Zealand (2) 608 559 577
Geismar (Louisiana, USA) (3) 500 519 527
Trinidad (Methanex interest) (4) 500 420 417
Egypt (50% interest) 158 69 53
Medicine Hat (Canada) 150 114 123
Chile (5) 220 68 73
----------------------------------------------------------------------------
2,136 1,749 1,770
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YTD YTD
Q3 2015 Q3 2016 Q3 2015
(thousands of tonnes) Production Production Production
----------------------------------------------------------------------------
----------------------------------------------------------------------------
New Zealand (2) 476 1,645 1,444
Geismar (Louisiana, USA) (3) 259 1,529 715
Trinidad (Methanex interest) (4) 398 1,150 1,212
Egypt (50% interest) - 197 16
Medicine Hat (Canada) 123 396 301
Chile (5) 3 241 116
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1,259 5,158 3,804
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(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. Our current annual operating capacity is 8.5 million tonnes,
including 0.9 million tonnes related to our Chile operations. 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.
(3) We commenced methanol production from Geismar 1 during the first quarter
of 2015 and from Geismar 2 late in the fourth quarter of 2015. Each facility
has an annual operating capacity of 1.0 million tonnes.
(4) The operating capacity of Trinidad is made up of the Titan (100%
interest) and Atlas (63.1% interest) facilities.
(5) The production capacity of our Chile I and IV facilities is 1.7 million
tonnes annually assuming access to economical natural gas feedstock.
Production for the third quarter of 2016 was 1,749,000 tonnes compared with 1,770,000 tonnes for the second quarter of 2016. Key production and operational highlights include:
-
-- Strong production from our three plants in New Zealand, with production
of 559,000 tonnes.
-
-- Geismar production rates continue to be strong, reflecting, in part, the
relatively new catalyst at these plants. During the quarter, we
consented to the Geismar 1 gas supply contract being assigned to a
significant North American physical natural gas producer and marketer.
As part of this consent, the Geismar 1 gas pricing formula has been
amended to eliminate the methanol revenue sharing component. The base
price for the contract is unchanged.
-
-- Operating rate of 84% in Trinidad, reflecting continued gas restrictions
in the region.
-
-- Egypt production of 69,000 tonnes (Methanex share). The plant was taken
offline for planned maintenance activities for approximately 40 days
during the third quarter of 2016.
-
-- Medicine Hat production of 114,000 tonnes or 76% of capacity, due to an
unplanned maintenance shutdown at the plant that resulted in lost
production of approximately 30,000 tonnes during the quarter.
-
-- Chile production of 68,000 tonnes, 100% supported by natural gas
supplies from Chile. The plant underwent planned maintenance for
approximately 30 days during the third quarter of 2016, and restarted in
early August.
CONFERENCE CALL
A conference call is scheduled for October 27, 2016 at 12:00 noon ET (9:00 am PT) to review these third quarter results. To access the call, dial the conferencing operator ten minutes prior to the start of the call at (416) 340-8530, or toll free at (800) 769-8320. Presentation slides summarizing the Q3 2016 results and a simultaneous audio-only webcast of the conference call can be accessed from our website at www.methanex.com. A playback version of the conference call will be available until November 17, 2016 at (905) 694-9451, or toll free at (800) 408-3053. The passcode for the playback version is 9343032. The webcast will be available on the website for three weeks 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".
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