Methanex Reports Record Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan 29, 2014) - For the fourth quarter of 2013, Methanex ( MX.TO )( MEOH )(SANTIAGO:Methanex) reported Adjusted EBITDA (1) of $245 million and Adjusted net income (1) of $167 million ($1.72 per share on a diluted basis (1) ). This compares with Adjusted EBITDA (1) of $184 million and Adjusted net income (1) of $117 million ($1.22 per share on a diluted basis (1) ) for the third quarter of 2013. For the year ended December 31, 2013, Methanex reported Adjusted EBITDA (1) of $736 million and Adjusted net income of $471 million ($4.88 per share on a diluted basis (1) ). This compares with Adjusted EBITDA (1) of $429 million and Adjusted net income of $180 million ($1.90 per share on a diluted basis (1) ) for the year ended December 31, 2012.

John Floren, President and CEO of Methanex commented, "Demand remained healthy in the fourth quarter, driving methanol pricing higher amidst industry supply constraints. Increased production from our plants in New Zealand and Chile, together with strong methanol pricing, contributed to robust EBITDA and earnings results. We are pleased to report that 2013 Adjusted net income and annual sales volume were the highest in the Company's history."

Mr. Floren added, "2014 will be an exciting time for our business. We recently added one million tonnes of operating capacity through the growth projects completed in New Zealand and Medicine Hat. We continue to progress our Geismar relocation projects and all of the major equipment pieces for Geismar 1 are now on site in Louisiana. We are targeting to be producing methanol from Geismar 1 in late 2014 and from Geismar 2 in early 2016. These key projects support the 3 million tonne increase in our operating capacity to 8 million tonnes by 2016, a time when new market supply is expected to be limited."

Mr. Floren concluded, "With over $700 million of cash on hand, an undrawn credit facility, robust balance sheet, and strong cash flow generation, we are well positioned to deliver on our growth projects, continue to grow our business and deliver on our commitment to return excess cash to shareholders."

A conference call is scheduled for January 30, 2014 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) 340-2218 , or toll free at (866) 226-1793 . A playback version of the conference call will be available until February 20, 2014 at (905) 694-9451 , or toll free at (800) 408-3053 . The passcode for the playback version is 4459948. Presentation slides summarizing Q4-13 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 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 2013 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 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. Refer to Additional Information - Supplemental Non-GAAP Measures section of the attached Interim Report for the three months ended December 31, 2013 for reconciliations to the most comparable GAAP measures.

Interim Report for the Three Months Ended December 31, 2013

At January 29, 2014 the Company had 96,156,491 common shares issued and outstanding and stock options exercisable for 1,737,606 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 .

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 1 and the calculation of Adjusted net income per common share 1 is as follows:
Three Months Ended Years Ended
($ millions except number of shares and per share amounts) Dec 31
2013
Sep 30
2013
Dec 31
2012
Dec 31
2013
Dec 31
2012
Net income (loss) attributable to Methanex shareholders $ 128 $ 87 $ (140) $ 329 $ (68)
Mark-to-market impact of share-based compensation, net of tax 34 30 8 101 14
Write-off of oil and gas rights, net of tax 5 - - 19 -
Geismar project relocation expenses, net of tax - - - 22 41
Asset impairment charge, net of tax - - 193 - 193
Adjusted net income 1 $ 167 $ 117 $ 61 $ 471 $ 180
Diluted weighted average shares outstanding (millions) 97 97 94 96 94
Adjusted net income per common share 1 $ 1.72 $ 1.22 $ 0.64 $ 4.88 $ 1.90
  • We recorded Adjusted EBITDA 1 of $245 million for the fourth quarter of 2013 compared with $184 million for the third quarter of 2013. The increase in Adjusted EBITDA 1 was primarily due to an increase in our average realized price to $493 per tonne for the fourth quarter of 2013 from $438 per tonne for the third quarter of 2013 and an increase in sales of Methanex-produced methanol.
  • Production for the fourth quarter of 2013 was 1,194,000 tonnes compared with 1,035,000 tonnes for the third quarter of 2013. Refer to the Production Summary section.
  • Sales of Methanex-produced methanol were 1,190,000 tonnes in the fourth quarter of 2013 compared with 1,045,000 in the third quarter of 2013.
  • During the fourth quarter of 2013, we completed a planned major refurbishment at the Motunui 2 facility. Our New Zealand operations are now capable of producing at the site's full annual production capacity of up to 2.4 million tonnes, depending on natural gas composition.
  • We continue to progress our Geismar relocation projects and during the fourth quarter we reached an important milestone with all of the major equipment pieces for Geismar 1 now on site in Louisiana. We are targeting to be producing methanol from Geismar 1 in late 2014 and from Geismar 2 in early 2016.
  • In December 2013, we completed an agreement to sell a 10% equity interest in the Methanex Egypt facility for $110 million. As we retained control of the entity, the $62.9 million gain realized on the sale has been recognized as an increase in shareholders' equity.
  • During the fourth quarter of 2013, we paid a $0.20 per share dividend to shareholders for a total of $19 million.
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 Additional Information - Supplemental Non-GAAP Measures section for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.

This Fourth Quarter 2013 Management's Discussion and Analysis ("MD&A") dated January 29, 2014 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, 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 Years Ended
($ millions, except per share amounts and where noted) Dec 31
2013
Sep 30
2013
Dec 31
2012
Dec 31
2013
Dec 31
2012
Production (thousands of tonnes) (attributable to Methanex shareholders) 1,194 1,035 1,067 4,344 4,071
Sales volumes (thousands of tonnes):
Methanex-produced methanol (attributable to Methanex shareholders) 1,190 1,045 1,059 4,304 4,039
Purchased methanol 663 715 664 2,715 2,565
Commission sales 274 237 176 972 855
Total sales volumes 1 2,127 1,997 1,899 7,991 7,459
Methanex average non-discounted posted price ($ per tonne) 2 557 502 450 507 443
Average realized price ($ per tonne) 3 493 438 389 441 382
Adjusted EBITDA (attributable to Methanex shareholders) 4 245 184 119 736 429
Cash flows from operating activities 162 181 80 586 416
Adjusted net income (attributable to Methanex shareholders) 4 167 117 61 471 180
Net income (loss) attributable to Methanex shareholders 128 87 (140) 329 (68)
Adjusted net income per common share (attributable to Methanex shareholders) 4 1.72 1.22 0.64 4.88 1.90
Basic net income (loss) per common share (attributable to Methanex shareholders) 1.33 0.91 (1.49) 3.46 (0.73)
Diluted net income (loss) per common share (attributable to Methanex shareholders) 1.32 0.90 (1.49) 3.41 (0.73)
Common share information (millions of shares):
Weighted average number of common shares 96 95 94 95 94
Diluted weighted average number of common shares 97 97 94 96 94
Number of common shares outstanding, end of period 96 96 94 96 94
1 Methanex-produced methanol includes volumes produced by Chile using natural gas supplied from Argentina under a tolling arrangement. Commission sales represent volumes marketed on a commission basis related to the 36.9% of the Atlas methanol facility and the portion 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 Additional Information - Supplemental Non-GAAP Measures section for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.

PRODUCTION SUMMARY

Annual 2013 2012 Q4 2013 Q3 2013 Q4 2012
(thousands of tonnes) Capacity 1 Production Production Production Production Production
New Zealand 2 2,430 1,419 1,108 400 349 378
Atlas (Trinidad) (63.1% interest) 1,125 971 826 268 254 180
Titan (Trinidad) 875 651 786 173 128 189
Egypt (50% interest) 3 630 623 557 159 168 129
Medicine Hat 560 476 481 86 130 132
Chile I and IV 1,800 204 313 108 6 59
Geismar 1 and 2 (Louisiana, USA) 4 - - - - - -
7,420 4,344 4,071 1,194 1,035 1,067
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 Motunui facilities and the Waitara Valley facility (refer to New Zealand section below).
3 On December 9, 2013, we completed the sale of a 10% equity interest in the Egypt facility. Production figures prior to December 9, 2013 reflect a 60% interest.
4 We are relocating two idle Chile facilities to Geismar, Louisiana and are targeting to be producing methanol from Geismar 1 in late 2014 and Geismar 2 by early 2016.

New Zealand

Our New Zealand methanol facilities produced 400,000 tonnes of methanol in the fourth quarter of 2013 compared with 349,000 tonnes in the third quarter of 2013. We completed a major refurbishment at the Motunui 2 facility during the fourth quarter of 2013. With all three facilities now operating, we are able to produce at the New Zealand site's full annual production capacity of up to 2.4 million tonnes, depending on natural gas composition.

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 173,000 tonnes in the fourth quarter of 2013 compared with 128,000 tonnes in the third quarter of 2013. The Titan facility underwent a planned turnaround in the third quarter of 2013 and returned to operation in early October. The Titan facility also experienced an unplanned outage during the fourth quarter which resulted in lost production of approximately 15,000 tonnes. The Atlas facility produced 268,000 tonnes in the fourth quarter of 2013 compared with 254,000 tonnes in the third quarter of 2013.

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 gas curtailments to the Trinidad site.

Egypt

On December 9, 2013, we completed the sale of a 10% equity interest in the Egypt methanol facility to Arab Petroleum Investments Corporation (APICORP) for $110 million. The production from this facility attributable to Methanex reflects a 50% interest after December 9, 2013.

On a 100% basis, the Egypt methanol facility produced 273,000 tonnes in the fourth quarter of 2013 (Methanex share of 159,000 tonnes) compared with 280,000 tonnes (Methanex share of 168,000 tonnes) in the third quarter of 2013. The Egypt facility experienced an unplanned outage during the fourth quarter of 2013 which resulted in lost production of approximately 35,000 tonnes (100% basis).

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

During the fourth quarter of 2013, we produced 86,000 tonnes at our Medicine Hat facility compared with 130,000 tonnes during the third quarter of 2013. The Medicine Hat facility experienced an unplanned outage which resulted in lost production of approximately 50,000 tonnes during the fourth quarter of 2013. The facility restarted on January 10, 2014 and is currently operating.

Chile

After idling our Chile operations during the southern hemisphere winter as a result of insufficient natural gas feedstock, we restarted the Chile I facility in September 2013. During the fourth quarter of 2013, we produced 108,000 tonnes in Chile operating the facility at approximately 50% of production capacity, supported by natural gas supplies from both Chile and Argentina through a tolling arrangement.

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.

Geismar, Louisiana

We continue to progress our two Geismar relocation projects and during the fourth quarter we reached an important milestone with all of the major equipment pieces for Geismar 1 now on site in Louisiana. We are targeting to be producing methanol from the 1.0 million tonne Geismar 1 facility in late 2014 and from the 1.0 million tonne Geismar 2 facility in early 2016. During the fourth quarter of 2013, we incurred $145 million of capital expenditures related to these projects, excluding capitalized interest.

FINANCIAL RESULTS

For the fourth quarter of 2013 we recorded Adjusted EBITDA of $245 million and Adjusted net income of $167 million ($1.72 per share on a diluted basis). This compares with Adjusted EBITDA of $184 million and Adjusted net income of $117 million ($1.22 per share on a diluted basis) for the third quarter of 2013. For the year ended December 31, 2013, we reported Adjusted EBITDA of $736 million and Adjusted net income of $471 million ($4.88 per share on a diluted basis) compared with Adjusted EBITDA of $429 million and Adjusted net income of $180 million ($1.90 per share on a diluted basis) for the year ended December 31, 2012.

For the fourth quarter of 2013, we reported net income attributable to Methanex shareholders of $128 million ($1.32 per share on a diluted basis) compared with net income attributable to Methanex shareholders for the third quarter of 2013 of $87 million ($0.90 income per share on a diluted basis).

On December 9, 2013, we completed the sale of a 10% equity interest in the Egypt methanol facility to APICORP for $110 million. The transaction decreases Methanex's ownership interest to approximately 50% with Methanex retaining control. As we retain control of the entity, under IFRS accounting standards, this is considered a transaction between equity holders and the $62.9 million gain realized on the sale is recognized as an increase in shareholders' equity.

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 as of December 9, 2013) 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 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
2013
Sep 30
2013
Dec 31
2012
Dec 31
2013
Dec 31
2012
Net income (loss) attributable to Methanex shareholders $ 128 $ 87 $ (140) $ 329 $ (68)
Mark-to-market impact of share-based compensation, net of tax 34 30 8 101 14
Write-off of oil and gas rights, net of tax 5 - - 19 -
Geismar project relocation expenses, net of tax - - - 22 41
Asset impairment charge, net of tax - - 193