(Source: MARKETWIRE)
Methanex Corporation (TSX: MX)(NASDAQ: MEOH)(SANTIAGO: Methanex) -
For the third quarter of 2009, Methanex reported Adjusted EBITDA(1)
of $31.0 million and a net loss of $0.8 million ($0.01 per share on a
diluted basis). This compares with Adjusted EBITDA of $24.8 million
and a net loss of $5.7 million ($0.06 per share on a diluted basis)
for the second quarter of 2009.
Bruce Aitken, President and CEO of Methanex, commented, "It is
pleasing to see the beginning of recovery in our numbers for the
quarter. Sales volumes are up 13% from Q2 2009 and realized methanol
prices rose about 16%. These results translated into improved EBITDA,
cash generation and earnings. However, the quarter was negatively
impacted by a number of mostly one-off costs such as stock-based
compensation and unplanned outages at our plants in Chile and
Trinidad."
Mr. Aitken added, "During the third quarter, methanol demand
increased in all regions globally and industry supply was impacted by
many planned and unplanned outages. These factors have led to a
recent strong recovery in methanol prices which provides upward
momentum to our earnings in the fourth quarter. And with increases in
production expected from our Chile operations and our new project in
Egypt over the next year, there is significantly more upside
potential to our earnings."
Mr. Aitken concluded, "With US$197 million of cash on hand at the end
of the quarter, a strong balance sheet, no near term refinancing
requirements, and an undrawn credit facility, we are well positioned
to continue to invest to grow the Company."
A conference call is scheduled for October 28, 2009 at 11:00 am ET
(8:00 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) 340-8018, or toll free at (866) 223-7781. A
playback version of the conference call will be available for
fourteen days at (416) 695-5800, or toll free at (800) 408-3053. The
security passcode for the playback version is 6704266. There will be
a simultaneous audio-only webcast of the conference call, which can
be accessed from our website at www.methanex.com. In addition, an
audio recording of the conference call can be downloaded from our
website for three weeks after 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", on the NASDAQ Global Market
in the United States under the trading symbol "MEOH", and on the
foreign securities market of the Santiago Stock Exchange in Chile
under the trading symbol "Methanex". Methanex can be visited online
at www.methanex.com.
FORWARD-LOOKING INFORMATION WARNING
This Third Quarter 2009 press release contains forward-looking
statements with respect to us and the chemical industry. Refer to
Forward-Looking Information Warning in the attached Third Quarter
2009 Management's Discussion and Analysis for more information.
(1) Adjusted EBITDA is a non-GAAP measure that does not have any
standardized meaning prescribed by Canadian generally accepted
accounting principles (GAAP) and therefore is unlikely to be
comparable to similar measures presented by other companies. Refer to
Additional Information - Supplemental Non-GAAP Measures in the
attached Third Quarter 2009 Management's Discussion and Analysis for
a description of each supplemental non-GAAP measure and a
reconciliation to the most comparable GAAP measure.
Interim Report For the Three Months Ended September 30, 2009
At October 27, 2009 the Company had 92,108,242 common shares issued and
outstanding and stock options exercisable for 2,680,636 additional common
shares.
Share Information
Methanex Corporation's common shares are listed for trading on the Toronto
Stock Exchange under the symbol MX, on the Nasdaq Global Market under the
symbol MEOH and on the foreign securities market of the Santiago Stock
Exchange in Chile under the trading symbol Methanex.
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.
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
THIRD QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS
Except where otherwise noted, all currency amounts are stated in
United States dollars.
This Third Quarter 2009 Management's Discussion and Analysis dated
October 27, 2009 should be read in conjunction with the 2008 Annual
Consolidated Financial Statements and the Management's Discussion and
Analysis included in the Methanex 2008 Annual Report. The Methanex
2008 Annual Report and additional information relating to Methanex is
available on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov.
Three Months Ended Nine Months Ended
--------------------------- ------------------
($ millions, except Sep 30 Jun 30 Sep 30 Sep 30 Sep 30
where noted) 2009 2009 2008 2009 2008
------------------------------------------------------- ------------------
Sales volumes (thousands
of tonnes)
Produced methanol 943 941 946 2,884 2,534
Purchased methanol 480 329 429 1,079 1,639
Commission sales (1) 194 161 172 486 483
------------------------------------------------------- ------------------
Total sales volumes 1,617 1,431 1,547 4,449 4,656
Methanex average
non-discounted posted
price ($ per tonne) (2) 251 211 499 227 564
Average realized price
($ per tonne) (3) 222 192 413 205 455
Adjusted EBITDA (4) 31.0 24.8 139.5 68.9 343.7
Cash flows from
operating activities 1.4 14.0 127.6 83.3 269.5
Cash flows from
operating activities
before changes in
non-cash working
capital (4) 36.3 17.7 103.5 58.8 271.4
Operating income
(loss) (4) 3.1 (4.0) 108.3 (16.7) 263.0
Net income (loss) (0.8) (5.7) 70.0 (25.0) 172.7
Basic net income (loss)
per common share (0.01) (0.06) 0.75 (0.27) 1.81
Diluted net income (loss)
per common share (0.01) (0.06) 0.74 (0.27) 1.81
Common share information
(millions of shares):
Weighted average
number of common
shares 92.1 92.0 93.9 92.0 95.2
Diluted weighted
average number of
common shares 92.1 92.0 94.3 92.0 95.7
Number of common
shares outstanding,
end of period 92.1 92.0 93.4 92.1 93.4
------------------------------------------------------- ------------------
(1) Commission sales represent volumes marketed on a commission basis.
Commission income is included in revenue when earned.
(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, net of commissions
earned, divided by the total sales volumes of produced and purchased
methanol.
(4) These items are non-GAAP measures that do not have any standardized
meaning prescribed by Canadian generally accepted accounting principles
(GAAP) and therefore are unlikely to be comparable to similar measures
presented by other companies. Refer to Additional Information -
Supplemental Non-GAAP Measures for a description of each non-GAAP
measure and a reconciliation to the most comparable GAAP measure.
PRODUCTION SUMMARY
YTD YTD
(thousands Q3 2009 Q2 2009 Q3 2008 Q3 2009 Q3 2008
of Capacity Product- Product- Product- Product- Product-
tonnes) (1) ion ion ion ion ion
--------------------------------------------------------------------------
Chile I, II,
III and IV 960 197 252 246 677 816
Titan 213 188 165 200 576 646
Atlas (63.1%
interest) 268 257 275 284 736 865
New Zealand (2) 350 202 203 126 599 370
--------------------------------------------------------------------------
1,791 844 895 856 2,588 2,697
--------------------------------------------------------------------------
(1) The production capacities for our Trinidad plants are stated at
original nameplate capacity. These facilities are able to operate above
original nameplate capacity as a result of efficiencies gained through
improvements and experience at these plants. The production capacity
for our facilities in Chile and New Zealand may be higher than original nameplate capacity as, over time, these figures have been adjusted to
reflect ongoing operating efficiencies at these facilities.
(2) In October 2008, we restarted one of our two idled 900,000 tonne per
year facilities at our Motunui site in New Zealand and we idled our
530,000 tonne per year Waitara Valley facility. We have the flexibility
to operate the Motunui plant or the Waitara Valley plant or both
depending on methanol supply and demand dynamics and the availability
of natural gas on commercially acceptable terms and accordingly, we
have included both of these facilities in the production capacity for
New Zealand. We have excluded the second Motunui facility from
production capacity in New Zealand as we currently do not intend to
restart this facility.
Chile
Our methanol facilities in Chile produced 197,000 tonnes
during the third quarter of 2009 compared with 252,000 tonnes during
the second quarter of 2009. Production from our Chile facilities for
the third quarter of 2009 was lower compared with the second quarter
of 2009 primarily due to plant mechanical issues that led to
unplanned outages in the third quarter of 2009 which resulted in lost
production of approximately 65,000 tonnes.
We are currently operating our methanol facilities in Chile at
approximately 25 to 30% of capacity primarily due to curtailments of
our natural gas supply from Argentina - refer to the Management's
Discussion and Analysis included in our 2008 Annual Report for more
information.
Our goal is ultimately to return to operating all four of our plants
in Chile with natural gas from suppliers in Chile. We are pursuing
investment opportunities with the state-owned energy company Empresa
Nacional del Petroleo (ENAP), GeoPark Chile Limited (GeoPark) and
others to help accelerate natural gas exploration and development in
southern Chile. During 2007, we signed an agreement with GeoPark
under which we provided $40 million in financing to support and
accelerate GeoPark's natural gas exploration and development
activities in the Fell block in southern Chile and we have recently
signed an agreement to provide a further $18 million in financing to
support GeoPark's natural gas exploration and development activities
in southern Chile. GeoPark has agreed to supply us with all natural
gas sourced from the Fell block under a ten-year exclusive supply
arrangement. In May 2008, we signed an agreement with ENAP to
accelerate natural gas exploration and development in the Dorado
Riquelme exploration block in southern Chile and to supply natural
gas to our production facilities in Chile. Final government approvals
were received in the third quarter of 2009. Under the arrangement, we
fund a 50% participation in the block and as at September 30, 2009,
we had contributed approximately $60 million. For the third quarter
of 2009 approximately 50% of total production at our Chilean
facilities was produced with natural gas supplied from the Fell and
Dorado Riquelme blocks. We expect natural gas supply from these
blocks to further increase during 2009 and we expect that we will be
able to startup a second plant at our Chile site later in 2009. We
believe the increased natural gas supply and the startup of a second
plant will result in more than 20% higher production from our Chile
site over the next year.
There continues to be other investment activities supporting the
acceleration of natural gas exploration and development in areas of
southern Chile. In late 2007, the government of Chile completed an
international bidding round to assign oil and natural gas exploration
areas that lie close to our production facilities and announced the
participation of five international oil and gas companies. Under the
terms of the agreements from the bidding round there are minimum
investment commitments. Planning and exploration activities have
commenced. In July 2008, we announced that under the international
bidding round, the Otway exploration block in southern Chile was
awarded to a consortium that includes Wintershall, GeoPark, and
Methanex. Wintershall and GeoPark each own a 42% interest in the
consortium and we own a 16% interest. Exploration work is expected to
commence during the fourth quarter of 2009. The minimum exploration
investment committed in the Otway block by the consortium for the
first phase is $11 million over the next three years.
We cannot provide assurance that ENAP, GeoPark or others will be
successful in the exploration and development of natural gas or that
we will obtain any additional natural gas from suppliers in Chile on
commercially acceptable terms.
Trinidad
Our Atlas and Titan methanol facilities in Trinidad represent over
2.0 million tonnes of competitive cost annual capacity. Our methanol
facilities in Trinidad produced a total of 445,000 tonnes during the
third quarter of 2009 compared with 440,000 tonnes during the second
quarter of 2009. We completed planned turnaround activities for the
Titan facility in June and early July 2009 and we also had an
unplanned outage at our Atlas facility during the third quarter of
2009.
New Zealand
Our New Zealand facilities produced 202,000 tonnes during the third
quarter of 2009 compared with 203,000 tonnes during second quarter of
2009.
In October 2008, we restarted one of our two idled 900,000 tonne per
year facilities at our Motunui site in New Zealand and we idled our
smaller scale 530,000 tonne Waitara Valley facility. We have the
flexibility to operate the Motunui plant or the Waitara Valley plant
or both depending on methanol supply and demand dynamics and the
availability of natural gas on commercially acceptable terms.
EARNINGS ANALYSIS
Our operations consist of a single operating segment - the production
and sale of methanol. In addition to the methanol that we produce at
our facilities, we also purchase and re-sell methanol produced by
others and we sell methanol on a commission basis. We analyze the
results of all methanol sales together. The key drivers of changes in
our Adjusted EBITDA for methanol sales are average realized price,
sales volume and cash costs.
For a further discussion of the definitions and calculations used in
our Adjusted EBITDA analysis, refer to How We Analyze Our Business.
For the third quarter of 2009, we recorded Adjusted EBITDA of $31.0
million and a net loss of $0.8 million ($0.01 per share on a diluted
basis). This compares with Adjusted EBITDA of $24.8 million and a net
loss of $5.7 million ($0.06 per share on a diluted basis) for the
second quarter of 2009 and Adjusted EBITDA of $139.5 million and net
income of $70.0 million ($0.74 per share on a diluted basis) for the
third quarter of 2008.
For the nine months ended September 30, 2009, we recorded Adjusted
EBITDA of $68.9 million and a net loss of $25.0 million ($0.27 per
share on a diluted basis). This compares with Adjusted EBITDA of
$343.7 million and net income of $172.7 million ($1.81 per share on a
diluted basis) during the same period in 2008.
Adjusted EBITDA
The increase (decrease) in Adjusted EBITDA resulted from changes in
the following:
Q3 2009 Q3 2009 YTD Q3 2009
compared with compared with compared with
($ millions) Q2 2009 Q3 2008 YTD Q3 2008
--------------------------------------------------------------------------
Average realized price $ 42 $ (272) $ (993)
Sales volumes 7 6 (21)
Total cash costs (43) 157 739
--------------------------------------------------------------------------
$ 6 $ (109) $ (275)
--------------------------------------------------------------------------
Average realized price
Three Months Ended Nine Months Ended
-------------------------- ------------------
($ per tonne, except Sep 30 Jun 30 Sep 30 Sep 30 Sep 30
where noted) 2009 2009 2008 2009 2008
------------------------------------------------------ ------------------
Methanex average
non-discounted
posted price (1) 251 211 499 227 564
Methanex average
realized price 222 192 413 205 455
Average discount 12% 9% 17% 10% 19%
------------------------------------------------------ ------------------
(1) 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.
The global economic slowdown in the latter part of 2008 led to a
sudden and significant reduction in global methanol demand and an
increase in global inventories. This resulted in a decrease in
contract methanol pricing during the fourth quarter of 2008 and into
2009. During 2009, global methanol demand has improved and as a
result of this improvement in demand and some planned and unplanned
plant outages across the industry, methanol prices have increased
recently - refer to Supply/Demand Fundamentals section below for more
information. Our average non-discounted posted price for the third
quarter of 2009 was $251 per tonne compared with $211 per tonne for
the second quarter of 2009 and $499 per tonne for the third quarter
of 2008. Our average realized price for the third quarter of 2009 was
$222 per tonne compared with $192 per tonne for the second quarter of
2009 and $413 per tonne for the third quarter of 2008. The changes in
our average realized price for the third quarter of 2009 increased
Adjusted EBITDA by $42 million compared with the second quarter of
2009 and decreased Adjusted EBITDA by $272 million compared with
third quarter of 2008. Our average realized price for the nine months
ended September 30, 2009 was $205 per tonne compared with $455 per
tonne for the same period in 2008 and this decreased our Adjusted
EBITDA by $993 million. For the third quarter of 2009 our average
realized price was approximately 12% lower than our average
non-discounted posted price. This compares with approximately 9%
lower for the second quarter of 2009 and 17% lower for the third
quarter of 2008. We have entered into long-term contracts for a
portion of our production volume with certain global customers where
prices are either fixed or linked to our costs plus a margin and
accordingly, we expect the discount from our average non-discounted
posted prices to widen during periods of higher methanol pricing.
Sales volumes
Total methanol sales volumes excluding commission sales volumes for
the third quarter of 2009 were higher than the second quarter of 2009
and the third quarter of 2008 by 153,000 tonnes and 48,000 tonnes,
respectively. This resulted in higher Adjusted EBITDA of $7 million
and $6 million, respectively. Total methanol sales volumes excluding
commission sales volumes for the nine months ended September 30, 2009
were lower compared with the same period in 2008 by 209,000 tonnes
and this resulted in lower Adjusted EBITDA of $21 million.
Total cash costs
The primary driver of changes in our total cash costs are changes in
the cost of methanol we produce at our facilities and changes in the
cost of methanol we purchase from others. Our production facilities
are underpinned by natural gas purchase agreements with pricing terms
that include base and variable price components. The variable
component is adjusted in relation to changes in methanol prices above
pre-determined prices at the time of production.
