News Releases Back to List

PDF Version of News Release    

Methanex Reports Fourth Quarter Results

January 27, 2016

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan. 27, 2016) - For the fourth quarter of 2015, Methanex (TSX:MX)(NASDAQ:MEOH) reported Adjusted EBITDA1 of $80 million and Adjusted net income1 of $15 million ($0.16 per share on a diluted basis1). This compares with Adjusted EBITDA of $95 million and Adjusted net income of $23 million ($0.26 per share on a diluted basis) for the third quarter of 2015. Net income attributable to Methanex shareholders was $10 million in the fourth quarter compared to $78 million in the third quarter of 2015. For the year ended December 31, 2015, Methanex reported Adjusted EBITDA of $401 million and Adjusted net income of $110 million ($1.20 per share on a diluted basis). This compares with Adjusted EBITDA of $702 million and Adjusted net income of $397 million ($4.12 per share on a diluted basis) for the year ended December 31, 2014.

John Floren, President and CEO of Methanex commented, "Our fourth quarter Adjusted EBITDA reflects lower average realized methanol pricing compared to the third quarter. The continued decline in oil pricing further reduced the affordability for methanol into energy applications. This, combined with new methanol supply introduced in the fourth quarter, negatively impacted methanol pricing."

Mr. Floren continued, "I am pleased to confirm that our one million tonne Geismar 2 plant started production on December 27, 2015 and has been operating at high rates since start up. The delivery of Geismar 2 ahead of schedule in a safe and efficient manner is a major accomplishment. The two Geismar plants are core components of our asset portfolio with strong, reliable production expected for years to come."

"We returned over $30 million to shareholders in the fourth quarter of 2015 in the form of dividends and share repurchases. While the future of oil and methanol pricing is uncertain, Methanex is well positioned to navigate through this period of challenging industry conditions. Our flexible cost structure decreases when methanol prices are lower, preserving positive cash margins at a broad range of methanol prices. With over $250 million cash on hand, a $400 million undrawn credit facility, and a robust balance sheet, we are well positioned to meet our financial and capital commitments. Further, with the higher operating capacity provided by the Geismar facilities, we believe we are well positioned to leverage a recovery in methanol pricing, allowing us to generate strong future cash flows."

A conference call is scheduled for January 28, 2016 at 12:00 noon ET (9:00 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) 340-8530, or toll free at (800) 769-8320. A playback version of the conference call will be available until February 18, 2016 at (905) 694-9451, or toll free at (800) 408-3053. The passcode for the playback version is 7161356. Presentation slides summarizing the Q4 2015 results and a simultaneous audio-only webcast of the conference call can be accessed from our website at www.methanex.com. The webcast will be available on the website for three weeks following the call.

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 2015 press release contains forward-looking statements with respect to us and the chemical industry. Refer to Forward-Looking Information Warning in the attached fourth quarter 2015 Management's Discussion and Analysis for more information.

1 The Company has used the terms Adjusted EBITDA, Adjusted net income, Adjusted net income per common share, Adjusted Revenue and operating income throughout this document. These terms are non-GAAP measures which 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 the Additional Information - Supplemental Non-GAAP Measures section of the attached Interim Report for the three and twelve months ended December 31, 2015 for reconciliations to the most comparable GAAP measures.

Interim Report for the Three Months Ended December 31, 2015

At January 27, 2016 the Company had 89,681,748 common shares issued and outstanding and stock options exercisable for 1,659,074 additional common shares.

Share Information

Methanex Corporation's common shares are listed for trading on the Toronto Stock Exchange under the symbol MX and on the Nasdaq Global Market under the symbol MEOH.

Transfer Agents & Registrars

CST Trust Company
320 Bay Street
Toronto, Ontario Canada M5H 4A6
Toll free in North America: 1-800-387-0825

Investor Information

All financial reports, news releases and corporate information can be accessed on our website at www.methanex.com.

Contact Information

Methanex Investor Relations
1800 - 200 Burrard Street
Vancouver, BC Canada V6C 3M1
E-mail: invest@methanex.com
Methanex Toll-Free: 1-800-661-8851

FOURTH QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS

Except where otherwise noted, all currency amounts are stated in United States dollars.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

  • A reconciliation from net income attributable to Methanex shareholders to Adjusted net income and the calculation of Adjusted net income per common share is as follows:
Three Months Ended Years Ended
($ millions except number of shares and per share amounts) Dec 31
2015
Sep 30
2015
Dec 31
2014
Dec 31
2015
Dec 31
2014
Net income attributable to Methanex shareholders $ 10 $ 78 $ 133 $ 201 $ 455
Mark-to-market impact of share-based compensation, net of tax 5 (55 ) (53 ) (34 ) (31 )
Gain related to the termination of a terminal services agreement, net of tax - - - (57 ) -
Argentina gas settlement, net of tax - - - - (27 )
Adjusted net income $ 15 $ 23 $ 80 $ 110 $ 397
Diluted weighted average shares outstanding (millions) 90 91 94 91 96
Adjusted net income per common share $ 0.16 $ 0.26 $ 0.85 $ 1.20 $ 4.12
  • We recorded Adjusted EBITDA of $80 million for the fourth quarter of 2015 compared with $95 million for the third quarter of 2015. The decrease in Adjusted EBITDA was primarily due to a decrease in our average realized price to $277 per tonne for the fourth quarter of 2015 from $323 per tonne for the third quarter of 2015.
  • Production for the fourth quarter of 2015 was 1,389,000 tonnes compared with 1,259,000 tonnes for the third quarter of 2015. Refer to the Production Summary section.
  • Sales of Methanex-produced methanol were 1,372,000 tonnes in the fourth quarter of 2015 compared with 1,238,000 in the third quarter of 2015.
  • We successfully started the Geismar 2 facility late in the fourth quarter of 2015, which is approximately three months ahead of our original schedule, while the estimated total combined cost for the completion of the two Geismar plants is unchanged at $1.4 billion.
  • During the fourth quarter of 2015 we paid a $0.275 per share dividend to shareholders for a total of $25 million.
  • During the fourth quarter of 2015 we repurchased 210,000 common shares for $8 million. Under the current normal course issuer bid, we are authorized to purchase up to a further 3 million shares by May 5, 2016.

This Fourth Quarter 2015 Management's Discussion and Analysis ("MD&A") dated January 27, 2016 for Methanex Corporation ("the Company") should be read in conjunction with the Company's condensed consolidated interim financial statements for the period ended December 31, 2015 as well as the 2014 Annual Consolidated Financial Statements and MD&A included in the Methanex 2014 Annual Report. Unless otherwise indicated, the financial information presented in this interim report is prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The Methanex 2014 Annual Report and additional information relating to Methanex is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

FINANCIAL AND OPERATIONAL DATA

Three Months Ended Years Ended
($ millions except per share amounts and where noted) Dec 31
2015
Sep 30
2015
Dec 31
2014
Dec 31
2015
Dec 31
2014
Production (thousands of tonnes) (attributable to Methanex shareholders) 1,389 1,259 1,207 5,193 4,853
Sales volume (thousands of tonnes)
Methanex-produced methanol (attributable to Methanex shareholders) 1,372 1,238 1,249 5,050 4,878
Purchased methanol 636 679 694 2,780 2,685
Commission sales 178 169 248 641 941
Total sales volume 1 2,186 2,086 2,191 8,471 8,504
Methanex average non-discounted posted price ($ per tonne) 2 327 384 453 374 507
Average realized price ($ per tonne) 3 277 323 390 322 437
Adjusted revenue (attributable to Methanex shareholders) 555 619 744 2,495 3,261
Adjusted EBITDA (attributable to Methanex shareholders) 80 95 150 401 702
Cash flows from operating activities 44 134 211 297 801
Adjusted net income (attributable to Methanex shareholders) 15 23 80 110 397
Net income attributable to Methanex shareholders 10 78 133 201 455
Adjusted net income per common share (attributable to Methanex shareholders) 0.16 0.26 0.85 1.20 4.12
Basic net income per common share (attributable to Methanex shareholders) 0.10 0.87 1.43 2.21 4.79
Diluted net income per common share (attributable to Methanex shareholders) 0.10 0.54 1.11 2.01 4.55
Common share information (millions of shares)
Weighted average number of common shares 90 90 93 91 95
Diluted weighted average number of common shares 90 91 94 91 96
Number of common shares outstanding, end of period 90 90 92 90 92
1 Methanex-produced methanol includes volume produced by Chile using natural gas supplied from Argentina under a tolling arrangement ("Tolling Volume"). For the fourth quarter of 2015, Tolling Volume was 5,000 tonnes. 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 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.

PRODUCTION SUMMARY

(thousands of tonnes) Annual
Operating
Capacity
1
2015
Production
2014
Production
Q4 2015
Production
Q3 2015
Production
Q4 2014
Production
New Zealand 2 2,430 1,856 2,196 412 476 542
Geismar 1 and 2 (Louisiana, USA) 3 2,000 959 - 244 259 -
Atlas (Trinidad) (63.1% interest) 1,125 912 907 241 226 233
Titan (Trinidad) 875 732 664 191 172 127
Egypt (50% interest) 630 74 416 58 - 128
Medicine Hat (Canada) 600 456 505 155 123 115
Chile I and IV 4 400 204 165 88 3 62
8,060 5,193 4,853 1,389 1,259 1,207
1 Operating capacity includes only those facilities which are currently capable of operating, assuming access to natural gas feedstock, 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 8.0 million tonnes, including 0.4 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 represents the two Motunui facilities and the Waitara Valley facility (refer to New Zealand section below).
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 production capacity of our Chile I and IV facilities is 1.7 million tonnes annually assuming access to natural gas feedstock.

New Zealand

Our New Zealand methanol facilities produced 412,000 tonnes of methanol in the fourth quarter of 2015 compared with 476,000 tonnes in the third quarter of 2015. Mechanical issues at our New Zealand facilities resulted in lost production of approximately 175,000 tonnes during the fourth quarter of 2015. Both the Motunui plants and the Waitara Valley plant were shut down for repairs during the fourth quarter to address mechanical issues which are now complete. The New Zealand facilities are capable of producing up to 2.4 million tonnes annually, depending on natural gas composition.

Geismar, United States

The Geismar 1 plant commenced production in late January 2015 and Geismar 2 commenced production in late December 2015. Geismar 1 produced 236,000 tonnes during the fourth quarter of 2015 compared to 259,000 tonnes during the third quarter of 2015. A mechanical issue at Geismar 1 during the fourth quarter resulted in lost production of approximately 15,000 tonnes.

Trinidad

Production in Trinidad during the quarter was impacted by gas curtailments at both plants at levels similar to those experienced over the past year. The Titan facility produced 191,000 tonnes in the fourth quarter of 2015 compared with 172,000 tonnes in the third quarter of 2015. The Atlas facility produced 241,000 tonnes (63.1% interest) in the fourth quarter of 2015 compared with 226,000 tonnes (63.1% interest) in the third quarter of 2015.

We continue to experience natural gas curtailments to our Trinidad facilities due to a mismatch between upstream supply to the Natural Gas Company of Trinidad and Tobago ("NGC") and downstream demand from NGC's customers including Atlas and Titan. We are engaged with key stakeholders to find a solution to this issue, but in the meantime expect to continue to experience gas curtailments to the Trinidad site.

Egypt

The Egypt methanol facility restarted midway through the fourth quarter of 2015, producing 116,000 tonnes (Methanex share of 58,000 tonnes) after being idled for most of 2015 due to natural gas restrictions during the peak Egyptian summer electricity consumption period. Prior to restart, the Egypt facility only operated twelve days during 2015, primarily due to gas restrictions.

The Egypt facility has experienced periodic natural gas supply restrictions since mid-2012 and gas restrictions have become more significant since 2014. We cannot predict when the gas supply situation will improve, but are optimistic that recent developments impacting upstream gas supply in Egypt could result in improved gas deliveries in the future.

Medicine Hat, Canada

During the fourth quarter of 2015, we produced 155,000 tonnes at our Medicine Hat facility compared with 123,000 tonnes during the third quarter of 2015. The Medicine Hat facility underwent a planned major refurbishment during the second quarter of 2015, returned to normal operation in mid-July, and has been operating at full rates since restart.

Chile

After idling our Chile operations during the southern hemisphere winter as a result of insufficient natural gas feedstock from Chile and Argentina, we restarted one of our two plants in late September 2015. During the fourth quarter of 2015 we produced 88,000 tonnes in Chile, supported by natural gas supplies both from Chile and from Argentina through a tolling arrangement. We have reached an agreement with Empresa Nacional del Petróleo ("ENAP") for gas supply until April 2016.

The future of our Chile operations is primarily dependent on the level of natural gas exploration and development in southern Chile and our ability to secure a sustainable natural gas supply to our facilities on economic terms from Chile and Argentina.

FINANCIAL RESULTS

For the fourth quarter of 2015, we reported net income attributable to Methanex shareholders of $10 million ($0.10 per share on a diluted basis) compared with net income attributable to Methanex shareholders for the third quarter of 2015 of $78 million($0.54 income per share on a diluted basis).

For the fourth quarter of 2015, we recorded Adjusted EBITDA of $80 million and Adjusted net income of $15 million ($0.16 per share on a diluted basis). This compares with Adjusted EBITDA of $95 million and Adjusted net income of $23 million ($0.26 per share on a diluted basis) for the third quarter of 2015.

We calculate Adjusted EBITDA and Adjusted net income by including amounts related to our equity share of the Atlas (63.1% interest) and Egypt (50% interest) facilities and 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 the Additional Information - Supplemental Non-GAAP Measures section for a further discussion on how we calculate these measures. Our analysis of depreciation and amortization, finance costs, finance income and other expenses and income taxes is consistent with the presentation of our consolidated statements of income and excludes amounts related to Atlas.

A reconciliation from net income attributable to Methanex shareholders to Adjusted net income and the calculation of Adjusted net income per common share is as follows:

Three Months Ended Years Ended
($ millions except number of shares and per share amounts) Dec 31
2015
Sep 30
2015
Dec 31
2014
Dec 31
2015
Dec 31
2014
Net income attributable to Methanex shareholders $ 10 $ 78 $ 133 $ 201 $ 455
Mark-to-market impact of share-based compensation, net of tax 5 (55 ) (53 ) (34 ) (31 )
Gain related to the termination of a terminal services agreement, net of tax - - - (57 ) -
Argentina gas settlement, net of tax - - - - (27 )
Adjusted net income $ 15 $ 23 $