Strong liquidity position with $783 million in cash on balance sheet and negotiated meaningful financial covenant reliefRecords net loss attributable to Methanex shareholders of $65 million and Adjusted EBITDA of $32 millionGlobal methanol demand declined by 5% in the second quarter due to impacts from the COVID-19 pandemic and lower oil price environmentExtensive preventative measures ongoing to protect the health and safety of our employees, contractors and communities where we do businessContinue to deliver secure and reliable methanol supply to customers around the world amid challenging market conditions and well-positioned to capitalize on a global market recoveryExcept where otherwise noted, all currency amounts are stated in United States dollars.VANCOUVER, British Columbia, July 29, 2020 (GLOBE NEWSWIRE) — For the second quarter of 2020, Methanex (TSX:MX) (NASDAQ:MEOH) reported a net loss attributable to Methanex shareholders of $65 million ($0.85 net loss per common share on a diluted basis) compared to net income of $23 million ($0.21 net income per common share on a diluted basis) in the first quarter of 2020. Adjusted EBITDA for the second quarter of 2020 was $32 million and Adjusted net loss was $64 million ($0.84 Adjusted net loss per common share). This compares with Adjusted EBITDA of $138 million and Adjusted net income of $8 million ($0.10 Adjusted net income per common share) for the first quarter of 2020.Second Quarter Results
We estimate that global methanol demand declined by approximately 5% in the second quarter of 2020 compared to the first quarter. Methanol demand declined significantly in most parts of the world, other than China, due to impacts from the COVID-19 pandemic and lower oil price environment.We recorded substantially lower Adjusted EBITDA in the second quarter of 2020, compared to the first quarter, due to a lower average realized price and lower sales of Methanex-produced methanol, which was partially offset by lower production costs and selling, general and administrative costs. In addition, in a declining methanol price environment, our margins tend to be lower than in a stable price environment due to inventory timing differences.Business and Financial Update
John Floren, President and CEO of Methanex, commented, “Our number one priority remains the safety of our employees, contractors and communities where we do business and we continue to take extensive preventative measures across our operations and offices during this uncertain time. We have demonstrated the resilience of our business model as our manufacturing operations and global supply chain continue to run effectively. I continue to be incredibly proud of our team who have done an outstanding job by maintaining secure and reliable methanol supply to our customers around the world.”As we previously announced, we have taken a number of steps to protect our business to respond to lower methanol demand and further strengthen our balance sheet and preserve liquidity by idling our Titan plant in Trinidad and our Chile IV plant, deferring approximately $500 million in capital spending on the Geismar 3 project for up to 18 months, reducing our dividend by approximately $100 million on an annual basis and reducing 2020 maintenance capital spending by $30 million. We have a flexible cost structure as approximately 60% of our natural gas supply is linked to methanol price which reduces our operating costs in a low methanol price environment. In addition, we continue to actively manage our operating costs across the organization and realized a further $8 million in savings in the second quarter compared to the first quarter.We ended the quarter with a strong liquidity position of $783 million in cash on the balance sheet. We have no near-term debt maturities. We also recently announced that we amended our $300 million committed revolving credit facility and $800 million non-revolving construction facility, which provides meaningful financial covenant relief. Following this amendment, we repaid $100 million of the amount outstanding on our revolving credit facility in the second quarter and that amount remains available as additional liquidity, if required.Given the uncertainty in the broader economic environment, we continue to plan for a wide range of scenarios, including ones where we see a prolonged period of lower methanol demand and continued low methanol prices. We are focused on cash preservation and continue to evaluate all options to ensure we maintain financial capacity and flexibility to navigate the current environment and emerge stronger over the cycle as conditions improve.Outlook
Mr. Floren, President and CEO of Methanex concluded, “We have begun to see some early signs of improving methanol demand with global economic activity beginning to recover and with oil pricing stabilizing in recent weeks. However, the near-term outlook remains uncertain as we believe that it is not possible to accurately predict the full extent and duration of the COVID-19 pandemic and lower oil price environment.”“We remain focused on operating our plants safely and reliably, delivering secure and reliable supply to our customers and protecting our balance sheet during this very uncertain time. We believe that with our resilient business model and strong liquidity, we are well-positioned to sustain our business in this uncertain environment and generate significant long-term value when market conditions recover.”FURTHER INFORMATION
The information set forth in this news release summarizes Methanex’s key financial and operational data for the second quarter of 2020. It is not a complete source of information for readers and is not in any way a substitute for reading the second quarter 2020 Management’s Discussion and Analysis (“MD&A”) dated July 29, 2020 and the unaudited condensed consolidated interim financial statements for the period ended June 30, 2020, 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 June 30, 2020 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 DATAMethanex-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 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.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.Revenue for the three and six months ended June 30, 2019 have been restated as compared to revenue reported in our quarterly MD&A and condensed quarterly financial statements issued for 2019 based on a restatement for the recognition of revenue on Atlas-produced methanol.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:We recorded a net loss attributable to Methanex shareholders of $65 million during the second quarter of 2020 compared to net income of $23 million in the first quarter of 2020. The decrease in earnings is primarily due to lower average realized methanol prices and lower sales of Methanex-produced methanol.Adjusted EBITDA was $32 million for the second quarter of 2020 compared with $138 million for the first quarter of 2020. Adjusted EBITDA for the second quarter of 2020 is lower than the first quarter of 2020 primarily due to a lower average realized methanol price and lower sales of Methanex-produced methanol, which is partially offset by lower production costs and selling, general, and administrative costs.Adjusted net loss was $64 million for the second quarter of 2020 compared to Adjusted net income of $8 million for the first quarter of 2020. The decrease in earnings is primarily due to a lower average realized methanol price and lower sales of Methanex-produced methanol, which is partially offset by lower production costs and selling, general, and administrative costs.Total sales volume for the second quarter of 2020 was 2,406,000 tonnes compared with 2,788,000 tonnes for the first quarter of 2020. Sales of Methanex-produced methanol were 1,717,000 tonnes in the second quarter of 2020 compared with 1,976,000 tonnes in the first quarter of 2020. Total sales decreased for the second quarter of 2020 as we adjusted our supply chain to reduce sales aligning with the decrease in methanol industry demand, resulting from the impact of COVID-19 and lower oil price environment.Production for the second quarter of 2020 was 1,628,000 tonnes compared with 2,007,000 tonnes for the first quarter of 2020. The decrease in production for the second quarter of 2020 was primarily the result of the idling of the Titan plant and Chile IV plant, along with two outages at our two Geismar plants.In June 2020, we renegotiated our $300 million revolving credit facility and $800 million non-revolving construction facility, to amend and waive terms and conditions and provide meaningful financial covenant relief. At the end of June, we repaid $100 million of the revolving credit facility, and drew a further $37 million from our $800 million construction credit facility for the Geismar 3 project. We ended the quarter with a strong liquidity position of $783 million in cash on the balance sheet.On April 29, 2020, we announced the reduction of our quarterly dividend by 90%, representing approximately $100 million in annualized cash savings. During the second quarter of 2020 we paid a $0.0375 per common share quarterly dividend to shareholders for a total of $3 million.PRODUCTION HIGHLIGHTSOperating 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. 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 New Zealand facilities are capable of producing up to 2.4 million tonnes annually, depending on natural gas composition and availability. In Q4 2019 we revised the Annual Operating Capacity from 2.4 million tonnes to 2.2 million tonnes based on the current outlook for available high CO2 natural gas.The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities.Key production and operational highlights during the second quarter include:New Zealand produced 450,000 tonnes compared with 443,000 tonnes in the first quarter of 2020. Production was similar in the second quarter of 2020 compared to the first quarter due to continued lower gas deliveries. Our production guidance for New Zealand is approximately 80% for 2020, or approximately 1.8 million tonnes.Geismar produced 441,000 tonnes during the second quarter of 2020 compared to 530,000 tonnes during the first quarter of 2020. Production for Geismar is lower in the second quarter of 2020 compared to the first quarter of 2020 as both plants carried out maintenance outages during the second quarter.Trinidad produced 241,000 tonnes (Methanex interest) during the second quarter of 2020 compared with 429,000 tonnes in the first quarter of 2020. Production in Trinidad is lower during the second quarter of 2020 compared to the first quarter of 2020 due to the Titan plant being idled effective March 16, 2020. Atlas continued to operate at similar rates to the first quarter of 2020 throughout the second quarter.Chile produced 204,000 tonnes during the second quarter of 2020 compared to 319,000 tonnes during the first quarter of 2020. Production for the second quarter of 2020 is lower compared to the first quarter of 2020 primarily due to the Chile IV plant being idled effective April 1, 2020.The Egypt facility produced 294,000 tonnes (Methanex interest – 147,000 tonnes) in the second quarter of 2020 compared with 266,000 tonnes (Methanex interest – 133,000 tonnes) in the first quarter of 2020. Egypt production was higher in the second quarter of 2020 compared to the first quarter of 2020, as a planned maintenance outage was undertaken in February 2020 impacting first quarter production.Medicine Hat produced 145,000 tonnes during the second quarter of 2020 compared to 153,000 tonnes during the first quarter of 2020 as a result of reduced supply of CO2.CONFERENCE CALLA conference call is scheduled for July 30, 2020 at 11:00 am ET (8:00 am PT) to review these second quarter results. To access the call, dial the conferencing operator fifteen minutes prior to the start of the call at (416) 340-2217, or toll free at (800) 806-5484. 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 August 13, 2020 at (905) 694-9451, or toll free at (800) 408-3053. The passcode for the playback version is 8140443#.ABOUT METHANEXMethanex 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 WARNINGThis second quarter 2020 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 second quarter 2020 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 MEASURESThe Company has used the terms Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per common share, Adjusted revenue and operating income (loss) 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 14 of the Company’s MD&A for the period ended June 30, 2020 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:Kim Campbell
Director, Investor Relations
Methanex Corporation
604-661-2600
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