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Methanex Reports Higher Fourth Quarter 2017 Results and Increases Dividend by 10%

January 31, 2018

VANCOUVER, British Columbia, Jan. 31, 2018 (GLOBE NEWSWIRE) -- For the fourth quarter of 2017, Methanex (TSX:MX) (NASDAQ:MEOH) reported net income attributable to Methanex shareholders of $68 million ($0.81 per common share on a diluted basis) compared to net income of $32 million ($0.38 per common share on a diluted basis) in the third quarter of 2017. Adjusted EBITDA for the fourth quarter of 2017 was $254 million and Adjusted net income was $143 million ($1.70 per common share). This compares with Adjusted EBITDA of $143 million and Adjusted net income of $52 million ($0.60 per common share) for the third quarter of 2017.

Excluded from Adjusted net income is a $37 million non-cash charge from the revaluation of a net deferred tax asset as a result of tax reform in the United States and a $38 million mark-to-market impact of share-based compensation due to the increase in the Methanex share price. For the year ended December 31, 2017, Methanex reported net income attributable to Methanex shareholders of $316 million ($3.64 net income per common shares on a diluted basis), Adjusted EBITDA of $838 million and Adjusted net income of $409 million ($4.71 net income per common share). This compares with a net loss attributable to Methanex shareholders of $13 million ($0.14 net loss per common share on a diluted basis), Adjusted EBITDA of $287 million and an Adjusted net loss of $15 million ($0.17 Adjusted net loss per common share) for the year ended December 31, 2016.

John Floren, President and CEO of Methanex commented, "Methanol pricing increased significantly through the fourth quarter and into early 2018 due to strong demand and methanol supply challenges. Our average realized methanol price was $350 per tonne in the fourth quarter of 2017 and $337 per tonne for the full year. We are extremely pleased with our operational and financial performance in 2017 as we achieved record production and sales volume and the highest Adjusted EBITDA in the Company's history."

"These record results enabled us to return $388 million to shareholders in 2017 through our regular dividend and the repurchase of 10% of the public float, or 6.2 million shares. I am pleased to announce that the Board of Directors has approved a 10% increase to the quarterly dividend to shareholders, to $0.33 per share from $0.30 per share. Our cash position and liquidity are strong and it is our intention to initiate a new 10% normal course issuer bid in March 2018, which is the earliest timing allowed under Canadian securities legislation."

"We are progressing the restart of our Chile IV plant and expect to complete the project by Q3 2018. We have low capital and financing requirements in the medium term, and have the ability to generate significant free cash flow at a wide range of methanol prices. With $375 million of cash on hand at the end of the fourth quarter, a committed revolving credit facility, robust balance sheet and strong cash generation capability, we believe we are well positioned to meet our financial commitments, pursue our near-term growth opportunities in Chile and deliver on our commitment to return excess cash to shareholders through dividends and share repurchases," Floren said.

FURTHER INFORMATION
The information set forth in this news release summarizes Methanex's key financial and operational data for the fourth quarter of 2017. It is not a complete source of information for readers and is not in any way a substitute for reading the fourth quarter 2017 Management’s Discussion and Analysis ("MD&A") dated January 31, 2018 and the unaudited condensed consolidated interim financial statements for the period ended December 31, 2017, 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, 2017 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 31
 2017
 Sep 30
 2017
 Dec 31
 2016
  Dec 31
 2017
 Dec 31
 2016
 
Production (thousands of tonnes) (attributable to Methanex shareholders)1,942 1,765 1,859  7,187 7,017 
Sales volume (thousands of tonnes)      
Methanex-produced methanol1,930 1,753 1,750  7,229 6,828 
Purchased methanol633 757 526  2,289 1,892 
Commission sales289 261 245  1,151 758 
Total sales volume 12,852 2,771 2,521  10,669 9,478 
       
Methanex average non-discounted posted price ($ per tonne) 2403 351 312  396 279 
Average realized price ($ per tonne) 3350 307 278  337 242 
       
Revenue861 720 585  3,061 1,998 
Adjusted revenue904 775 635  3,227 2,118 
Adjusted EBITDA254 143 139  838 287 
Cash flows from operating activities206 124 66  788 227 
Adjusted net income (loss)143 52 41  409 (15)
Net income (loss) (attributable to Methanex shareholders)68 32 24  316 (13)
       
Adjusted net income (loss) per common share1.70 0.60 0.46  4.71 (0.17)
Basic net income (loss) per common share0.81 0.38 0.28  3.64 (0.14)
Diluted net income (loss) per common share0.81 0.38 0.28  3.64 (0.14)
       
Common share information (millions of shares)      
Weighted average number of common shares84 86 90  87 90 
Diluted weighted average number of common shares84 86 90  87 90 
Number of common shares outstanding, end of period84 85 90  84 90 
            

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. Methanex-produced methanol includes any volume produced by Chile using natural gas supplied from Argentina under a tolling arrangement ("Tolling Volume"). There has been no Tolling Volume produced in the periods presented.

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 and purchased methanol, but excluding Tolling Volume.

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

    
 Three Months Ended Years Ended
($ millions except number of shares and per share amounts)Dec 31
 2017

 Sep 30
 2017
 Dec 31
 2016
  Dec 31
 2017

 Dec 31
 2016
 
Net income (loss) (attributable to Methanex shareholders)$68 $32 $24  $316 $(13)
U.S. tax reform charge37    37  
Mark-to-market impact of share-based compensation, net of tax38 20 17  56 19 
Argentina gas settlement     (21)
Adjusted net income (loss)$143 $52 $41  $409 $(15)
Diluted weighted average shares outstanding (millions)84 86 90  87 90 
Adjusted net income (loss) per common share$1.70 $0.60 $0.46  $4.71 $(0.17)
                 
  • We recorded net income attributable to Methanex shareholders of $68 million during the fourth quarter of 2017 compared to net income of $32 million in the third quarter of 2017. The increase in earnings is primarily due to an increase in our average realized methanol price during the fourth quarter, offset by a $37 million non-cash charge from the revaluation of a net deferred tax asset as a result of tax reform in the United States and a $38 million mark-to-market impact of share-based compensation due to the increase in the Methanex share price.

  • We recorded Adjusted EBITDA of $254 million for the fourth quarter of 2017 compared with $143 million for the third quarter of 2017. Adjusted net income was $143 million for the fourth quarter of 2017 compared to Adjusted net income of $52 million for the third quarter of 2017. The increase in Adjusted EBITDA and Adjusted net income is primarily due to an increase in our average realized methanol price to $350 per tonne for the fourth quarter of 2017 from $307 per tonne for the third quarter of 2017.

  • Production for the fourth quarter of 2017 was a record 1,942,000 tonnes compared with 1,765,000 tonnes for the third quarter of 2017.

  • Total sales volume for the fourth quarter of 2017 was a record 2,852,000 tonnes compared with 2,771,000 tonnes for the third quarter of 2017. Sales of Methanex-produced methanol were 1,930,000 tonnes in the fourth quarter of 2017 compared with 1,753,000 tonnes in the third quarter of 2017.

  • Cash flows from operating activities in the fourth quarter of 2017 increased to $206 million compared with $124 million for the third quarter of 2017, an increase of $82 million. The increase is primarily the result of the impact of higher realized methanol prices.

  • During the fourth quarter of 2017 we completed the 10% normal course issuer bid initiated in March 2017 repurchasing the maximum 6,152,358 common shares in 2017 for approximately $286 million.

  • During the fourth quarter of 2017 we paid a $0.30 per common share dividend to shareholders for a total of $25 million.

  • We announced today that the Board of Directors has approved a 10% increase to our quarterly dividend to shareholders, to $0.33 per share per quarter from $0.30 per share per quarter to be effective March 2018.

  • Our cash position and liquidity are strong and it is our intention to initiate a new 10% normal course issuer bid on March 2018, which is the earliest timing allowed under Canadian securities legislation.

  • In 2017 we achieved record production and sales volume and the highest annual Adjusted EBITDA in the Company's history.

PRODUCTION HIGHLIGHTS

             
(thousands of tonnes)Annual Operating
Capacity1
 2017
Production
 2016
Production
 Q4 2017
Production
 Q3 2017
Production
 Q4 2016
Production
 
New Zealand 22,430 1,943 2,181 558 502 536 
Geismar (USA)2,000 1,935 2,055 506 499 526 
Trinidad (Methanex interest) 32,000 1,768 1,605 466 457 455 
Egypt (50% interest)630 534 293 145 71 96 
Medicine Hat (Canada)600 593 488 158 158 92 
Chile 4880 414 395 109 78 154 
 8,540 7,187 7,017 1,942 1,765 1,859 
             

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. 

The operating capacity of New Zealand is made up of the two Motunui facilities and the Waitara Valley facility.

The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities.

4  The production capacity of our Chile I and IV facilities is 1.7 million tonnes annually assuming access to natural gas feedstock.

Key production and operational highlights during the fourth quarter include:

  • New Zealand production increased to 558,000 tonnes compared with 502,000 tonnes in the third quarter of 2017. The New Zealand facilities are capable of producing up to 2.4 million tonnes annually, depending on natural gas composition.

  • Geismar production rates continue to be strong, with production of 506,000 tonnes.

  • Trinidad produced 466,000 tonnes (Methanex interest) compared with 457,000 tonnes in the third quarter of 2017. We continue to experience gas curtailments in Trinidad.

  • Egypt produced 145,000 tonnes (Methanex share). Following the turnaround performed during the third quarter of 2017, the plant has run at high rates.

  • Medicine Hat continued to run at high rates with production of 158,000 tonnes.

  • Chile produced 109,000 tonnes, produced using only natural gas supply from Chile.

CONFERENCE CALL

A conference call is scheduled for February 1, 2018 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) 340-2216, or toll free at (800) 273-9672. 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 15, 2018 at (905) 694-9451, or toll free at (800) 408-3053. The passcode for the playback version is 4927889#.

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 2017 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 2017 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 MEASURES

The Company has used the terms Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per common share, Adjusted revenue and operating income throughout this document. These items are non-GAAP measures 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 - Supplemental Non-GAAP measures on page 13 of the Company's MD&A for the period ended December 31, 2017 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:

Dean Richardson
Vice President, Treasury and Investor Relations
Methanex Corporation
604-661-2600



FOR FURTHER INFORMATION PLEASE CONTACT: