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Methanex Reports Stronger Earnings in the First Quarter of 2013; Increases Dividend 8%

April 24, 2013

VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 24, 2013) - For the first quarter of 2013, Methanex (TSX:MX)(NASDAQ:MEOH) reported Adjusted EBITDA1 of $149 million and Adjusted net income1 of $88 million ($0.92 per share on a diluted basis1). This compares with Adjusted EBITDA1 of $119 million and Adjusted net income1 of $61 million ($0.64 per share on a diluted basis1) for the fourth quarter of 2012.

Methanex also announced that its Board of Directors has approved an 8 percent increase to its quarterly dividend to shareholders, from $0.185 to $0.20 per share. The increased dividend will apply commencing with the dividend payable on June 30, 2013 to holders of common shares on record on June 16, 2013.

John Floren, President and CEO of Methanex commented, "Higher methanol prices in the first quarter contributed to higher Adjusted EBITDA compared to last quarter. Entering the second quarter, methanol demand has continued to be healthy and the pricing environment remains stable. With strong earnings, a positive outlook for the methanol industry and the quality of the expansion plans underway, I am pleased to confirm that our Board of Directors has approved another increase to our regular dividend. This represents the ninth increase since we implemented a dividend in 2002."

Mr. Floren added, "We also announced today that we have made the decision to proceed with the relocation of a second one million tonne plant from our Chile site to Geismar, Louisiana. Our focus in the near term remains the successful execution of both plant relocations and our value-creating growth projects in New Zealand and Medicine Hat. Combined, these projects represent three million tonnes of production capacity that are expected to be completed in increments through early 2016."

Mr. Floren concluded, "With over US$700 million of cash on hand, an undrawn credit facility, a robust balance sheet, and strong cash flow generation, we are well positioned to complete our expansion plans, pursue other strategic growth opportunities and continue to deliver on our commitment to return excess cash to shareholders."

A conference call is scheduled for April 25, 2013 at 12:00 noon ET (9:00 am PT) to review these first quarter results. To access the call, dial the Conferencing operator ten minutes prior to the start of the call at (416) 340-8527, or toll free at (877) 240-9772. A playback version of the conference call will be available until June 24, 2013 (905) 694-9451, or toll free at (800) 408-3053. The passcode for the playback version is 3021008. Presentation slides summarizing Q1-13 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 four weeks following the call.

Methanex is a Vancouver-based, publicly traded company and is the world's largest 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 First Quarter 2013 press release contains forward-looking statements with respect to us and the chemical industry. Refer to Forward-Looking Information Warning in the attached First Quarter 2013 Management's Discussion and Analysis for more information.

1 Adjusted EBITDA, Adjusted net income and Adjusted net income per common share 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 items considered by management to be non-operational, including asset impairment charges. Refer to the Additional Information - Supplemental Non-GAAP Measures section of the attached Interim Report for the three months ended March 31, 2013 for reconciliations to the most comparable GAAP measures.

Interim Report for the Three Months Ended March 31, 2013

At April 24, 2013 the Company had 94,942,159 common shares issued and outstanding and stock options exercisable for 3,418,808 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

CIBC Mellon 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.

FIRST 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 (loss) attributable to Methanex shareholders to Adjusted net income1 and the calculation of Adjusted net income per common share1 is as follows:
Three Months Ended
($ millions except number of shares and per share amounts) Mar 31
2013
Dec 31
2012
Mar 31
2012
Net income (loss) attributable to Methanex shareholders $ 60 $ (140 ) $ 22
Mark-to-market impact of share-based compensation, net of tax 28 8 17
Asset impairment charge, net of tax - 193 -
Adjusted net income 1 $ 88 $ 61 $ 39
Diluted weighted average shares outstanding (millions) 96 94 95
Adjusted net income per common share 1 $ 0.92 $ 0.64 $ 0.41
  • We recorded Adjusted EBITDA1 of $149 million for the first quarter of 2013 compared with $119 million for the fourth quarter of 2012. The increase in Adjusted EBITDA1 was primarily due to an increase in average realized price to $412 per tonne for the first quarter of 2013 from $389 per tonne for the fourth quarter of 2012.

  • Production for the first quarter of 2013 was 1,057,000 tonnes compared with 1,067,000 tonnes for the fourth quarter of 2012. Refer to the Production Summary section.

  • Sales of Methanex-produced methanol were 1,024,000 tonnes in the first quarter of 2013 compared with 1,059,000 in the fourth quarter of 2012.

  • During the first quarter of 2013, we announced our commitment to restart the Waitara Valley facility and complete a debottlenecking project at the Motunui site. We expect these initiatives will allow our New Zealand operations to operate at their full annual production capacity of up to 2.4 million tonnes, depending on natural gas composition.

  • We continue to make good progress with our project to relocate an idle Chile facility to Geismar, Louisiana. During the first quarter of 2013, we signed an agreement with Chesapeake Energy to supply the facility's natural gas requirements for a ten-year period.

  • We announced today that we have reached a final investment decision to proceed with the relocation of a second Chile facility to the Geismar site. We expect this project will add a further 1.0 million tonnes of annual operating capacity and is expected to be operational in early 2016.

  • We also announced today that the Board of Directors has approved an 8 percent increase to our quarterly dividend to shareholders, from $0.185 per share to $0.20 per share, effective with the dividend payable June 30, 2013.

1 These items are non-GAAP measures 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 - Supplemental Non-GAAP Measures section for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.

This First Quarter 2013 Management's Discussion and Analysis ("MD&A") dated April 24, 2013 for Methanex Corporation ("the Company") should be read in conjunction with the Company's condensed consolidated interim financial statements for the period ended March 31, 2013 as well as the 2012 Annual Consolidated Financial Statements and MD&A included in the Methanex 2012 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 2012 Annual Report and additional information relating to Methanex is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Effective January 1, 2013, we adopted new IFRS standards related to consolidation and joint arrangement accounting. Under these new standards, our 63.1% interest in the Atlas entity, which was previously proportionately consolidated in our financial statements, is accounted for using the equity method. This change has been applied retrospectively. As a result, amounts related to Atlas are no longer included in individual line items in our consolidated financial statements and the net assets and net earnings are presented separately. For purposes of analyzing our consolidated financial results in this MD&A, the adjusted EBITDA from our 63.1% interest in the Atlas entity is included in Adjusted EBITDA.

FINANCIAL AND OPERATIONAL DATA

Three Months Ended
($ millions, except per share amounts and where noted) Mar 31
2013
Dec 31
2012
Mar 31
2012
Production (thousands of tonnes) (attributable to Methanex shareholders) 1,057 1,067 945
Sales volumes (thousands of tonnes):
Methanex-produced methanol (attributable to Methanex shareholders) 1,024 1,059 926
Purchased methanol 588 664 691
Commission sales 1 219 176 198
Total sales volumes 1,831 1,899 1,815
Methanex average non-discounted posted price ($ per tonne) 2 474 450 437
Average realized price ($ per tonne) 3 412 389 382
Adjusted EBITDA (attributable to Methanex shareholders) 4 149 119 93
Adjusted cash flows from operating activities (attributable to Methanex shareholders) 4 127 101 89
Cash flows from operating activities 118 76 74
Adjusted net income (attributable to Methanex shareholders) 4 88 61 39
Net income (loss) attributable to Methanex shareholders 60 (140 ) 22
Adjusted net income per common share (attributable to Methanex shareholders) 4, 5 0.92 0.64 0.41
Basic net income (loss) per common share (attributable to Methanex shareholders) 0.64 (1.49 ) 0.24
Diluted net income (loss) per common share (attributable to Methanex shareholders) 0.63 (1.49 ) 0.23
Common share information (millions of shares):
Weighted average number of common shares 95 94 93
Diluted weighted average number of common shares 96 94 95
Number of common shares outstanding, end of period 95 94 94
1 Commission sales represent volumes marketed on a commission basis related to the 36.9% of the Atlas methanol facility and 40% 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 volumes of Methanex-produced (attributable to Methanex shareholders) and purchased methanol.
4 These items are non-GAAP measures 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 - Supplemental Non-GAAP Measures section for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.
5 For the three month period ended December 31, 2012, stock options have been excluded from the calculation of diluted net loss per common share (attributable to Methanex shareholders) as their effect would be anti-dilutive. However, for the calculation of adjusted net income per common share (attributable to Methanex shareholders) stock options have been included in the denominator and the diluted weighted average number of common shares is 95 million.

PRODUCTION SUMMARY

Q1 2013 Q4 2012 Q1 2012
(thousands of tonnes) Capacity1 Production Production Production
New Zealand 2 608 309 378 174
Atlas (Trinidad) (63.1% interest) 281 248 180 127
Titan (Trinidad) 218 181 189 215
Egypt (60% interest) 190 133 129 202
Medicine Hat (Canada) 118 131 132 114
Chile I and IV 450 55 59 113
Geismar I and II (Louisiana, USA) 3 500 - - -
2,365 1,057 1,067 945
1 The production capacity of our facilities may be higher than original nameplate capacity as, over time, these figures have been adjusted to reflect ongoing operating efficiencies. Actual production for a facility in any given year may be higher or lower than annual production capacity due to a number of factors, including natural gas composition or the age of the facility's catalyst.
2 The annual production capacity of New Zealand represents the two 0.85 million tonne facilities at Motunui and the 0.53 million tonne facility at Waitara Valley. The current operating capacity of the Motunui facilities is 1.5 million tonnes due to distillation capacity constraints (refer to New Zealand section below).
3 We are relocating two idle Chile facilities to Geismar, Louisiana. The Geismar I facility is expected to be operational by the end of 2014 and the Geismar II facility is expected to be operational in early 2016.

New Zealand

Our New Zealand methanol facilities produced 309,000 tonnes of methanol in the first quarter of 2013 compared with 378,000 tonnes in the fourth quarter of 2012. During the first quarter of 2013, the Motunui facilities suffered an equipment failure which resulted in an unplanned outage and lost production of approximately 60,000 tonnes. The equipment was repaired and the Motunui facilities returned to operation at the end of March 2013. We are in the process of refurbishing the Waitara Valley facility and debottlenecking the Motunui facilities which we expect will allow us to produce at the site's full annual production capacity of up to 2.4 million tonnes, depending on natural gas composition, by the end of 2013.

Trinidad

In Trinidad, we own 100% of the Titan facility with an annual production capacity of 875,000 tonnes and have a 63.1% interest in the Atlas facility with an annual production capacity of 1,125,000 tonnes (63.1% interest). The Titan facility produced 181,000 tonnes in the first quarter of 2013 compared with 189,000 tonnes in the fourth quarter of 2012. Production in the first quarter of 2013 was impacted by periodic natural gas curtailments and minor unplanned outages.

The Atlas facility produced 248,000 tonnes in the first quarter of 2013 compared with 180,000 tonnes in the fourth quarter of 2012. The Atlas facility was shut down at the end of September 2012 for repairs and returned to production at the end of October 2012.

We continue to experience some natural gas curtailments to our Trinidad facilities due to a mismatch between upstream commitments to supply the Natural Gas Company of Trinidad and Tobago (NGC) and downstream demand from NGC's customers, which becomes apparent when an upstream supplier has a technical issue or planned maintenance that reduces gas delivery. We are engaged with key stakeholders to find a solution to this issue, but in the meantime expect to continue to experience some gas curtailments to the Trinidad site.

Egypt

The Egypt methanol facility produced 133,000 tonnes (60% interest) in the first quarter of 2013 compared with 129,000 tonnes in the fourth quarter of 2012. Production during the first quarter of 2013 and the fourth quarter of 2012 was impacted by natural gas supply restrictions.

The Egypt facility has experienced periodic natural gas supply restrictions since mid-2012 which have resulted in production below full capacity. This situation may persist in the future and become more acute during the summer months when electricity demand is at its peak. Refer to page 25 of our 2012 Annual Report for further details.

Medicine Hat, Canada

Our 470,000 tonne per year facility in Medicine Hat, Alberta produced 131,000 tonnes in the first quarter of 2013 compared with 132,000 tonnes during the fourth quarter of 2012. The Medicine Hat facility is currently able to produce above stated production capacity due to the age of its catalyst and the composition of the natural gas feedstock. We are currently debottlenecking the Medicine Hat facility which we expect will add a further 90,000 tonnes of annual production capacity by the end of the third quarter of 2013.

Chile

During the first quarter of 2013 we produced 55,000 tonnes in Chile operating one plant at approximately 20% of production capacity. In addition, in March 2013, we began receiving natural gas from Argentina under an arrangement whereby we process the natural gas received and return the methanol produced to Argentina. We produced an additional 6,000 tonnes under this arrangement during the first quarter of 2013 and have continued receiving some natural gas from Argentina in April 2013.

While investments have been made by us and others to accelerate the exploration and development of natural gas in southern Chile, the potential for a significant increase in gas production is more challenging than we had originally anticipated. As a result of the short-term outlook for gas supply in Chile and Argentina, we anticipate idling our Chile operations shortly due to insufficient natural gas feedstock to keep our plant operating through the southern hemisphere winter. We are continuing to work with Empresa Nacional del Petroleo (ENAP) and others to secure sufficient natural gas to sustain our operations and while the restart of a Chile plant is possible later in 2013, the restart is dependent on securing a sustainable natural gas position to operate over the medium term.

The future of our Chile operations is primarily dependent on the level of 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.

Geismar, Louisiana

We are in the process of relocating the idle Chile II facility to Geismar, Louisiana (Geismar I). The 1.0 million tonne Geismar I facility is expected to be operational by the end of 2014. During the first quarter of 2013 we spent $43 million on this project and remaining expenditures at March 31, 2013 are estimated to be $420 million.

We announced today that we have made a final investment decision to proceed with the relocation of the Chile III facility to the Geismar site (Geismar II). We expect the 1.0 million tonne Geismar II plant to be operational in early 2016. Estimated project costs are $550 million.

FINANCIAL RESULTS

For the first quarter of 2013 we recorded Adjusted EBITDA of $149 million and Adjusted net income of $88 million ($0.92 per share on a diluted basis). This compares with Adjusted EBITDA of $119 million and Adjusted net income of $61 million ($0.64 per share on a diluted basis) for the fourth quarter of 2012.

For the first quarter of 2013, we reported net income attributable to Methanex shareholders of $60 million ($0.63 per share on a diluted basis) compared with a net loss attributable to Methanex shareholders for the fourth quarter of 2012 of $140 million ($1.49 loss per share on a diluted basis). Our results for the fourth quarter of 2012 were impacted by a non-cash before-tax asset impairment charge of $297 million related to the carrying value of our Chile assets.

Effective January 1, 2013, we adopted new IFRS standards related to consolidation and joint arrangement accounting. Under these new standards, our 63.1% interest in the Atlas entity, which was previously proportionately consolidated in our financial statements, is accounted for using the equity method. This change has been applied retrospectively. As a result, amounts related to Atlas are no longer included in individual line items in our consolidated financial statements and the net assets and net earnings are presented separately. For purposes of analyzing our consolidated financial results in this MD&A, the adjusted EBITDA from our 63.1% interest in the Atlas entity is included in Adjusted EBITDA. 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.

We calculate Adjusted EBITDA and Adjusted net income by including amounts related to our equity share of the Atlas (63.1% interest) and Egypt (60% interest) facilities and by excluding the mark-to-market impact of share-based compensation as a result of changes in our share price and items which are considered by management to be non-operational. Refer to the Additional Information - Supplemental Non-GAAP Measures section for a further discussion on how we calculate these measures.

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

Three Months Ended
($ millions except number of shares and per share amounts) Mar 31
2013
Dec 31
2012
Mar 31
2012
Net income (loss) attributable to Methanex shareholders $ 60 $ (140 ) $ 22
Mark-to-market impact of share-based compensation, net of tax 28 8 17
Asset impairment charge, net of tax - 193 -
Adjusted net income 1 $ 88 $ 61 $ 39
Diluted weighted average shares outstanding (millions) 96 94 95
Adjusted net income per common share 1,2 $ 0.92 $ 0.64 $ 0.41
1 These items are non-GAAP measures 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 - Supplemental Non-GAAP Measures section for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.
2 For the three months ended December 31, 2012, stock options have been excluded from the calculation of diluted net loss per common share (attributable to Methanex shareholders) as their effect would be anti-dilutive. However, for the calculation of adjusted net income per common share (attributable to Methanex shareholders) stock options have been included in the denominator and the diluted weighted average number of common shares is 95 million.

We review our financial results by analyzing changes in Adjusted EBITDA, mark-to-market impact of sha